Confusion in South West At National Minimum Wage Hike

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Confusion reigns among SMEs in the South West as National Minimum Wage hike looms

As the Government announces its new multi-million pound drive to raise awareness of employment rights and how to enforce them, the latest research from Bibby Financial Services* reveals that despite ministerial efforts, there is still widespread confusion and a lack of awareness among small businesses in the South West about National Minimum Wage (NMW) levels, and the potential cost implications associated with this legislation.

In fact, nearly a quarter (24%) of small business owners and managers in the South West are not fully aware the NMW is going to increase on 1 October, slightly lower than the UK wide figure of 31 per cent.

However, when it comes to understanding the actual NMW rate for adults aged 22 and over, there is equal confusion. Nearly half of small business owners and managers in the South West (42%) say they don’t know what the exact rate is, and nearly a fifth (16%) mistakenly believe the NMW rate is rising by 51p to £6.03 – a massive 9 per cent increase when in fact the rate is only going up by 21p to £5.73.

These results come at a time when the Government has just launched its Fair Employment Board, a new national initiative to raise awareness of employment rights and how to enforce them. It aims to safeguard workers’ rights when it comes to issues such as minimum wage and health and safety.

Looking at the whole regional picture, there is a considerable amount of uncertainty within the small business community about the planned hike. More than half (58%) of owners and managers in East Anglia are not fully up to speed with the changes, while 54 per cent of businesses in the North West are just as unclear. Small firms in the West Midlands fair a lot better with 83 per cent claiming full knowledge of the new rates.

In terms of sectors, agricultural businesses are the least informed with a significant two thirds (66%) uncertain. In contrast, more than three quarters (78%) of hotels and catering firms are very aware of the planned hike.

Ashley Clarke, Bibby Financial Services spokesperson for the South West, says: “It is worrying that there is still so much uncertainty among small businesses about National Minimum Wage levels, particularly when the Government is introducing tougher penalties for firms who, for whatever reason, fail to abide by minimum wage legislation.  Just last year, a children’s nursery owner became the first person to be criminally prosecuted by HM Revenue and Customs (HMRC) for breaking minimum wage laws. With each criminal offence carrying a maximum fine of £5,000 and a criminal record, it is clear that small businesses need to be fully aware of the legislation or risk the consequences.

“At a time when business costs are escalating rapidly as the credit crunch continues to bite and fuel costs soar, the rise in the National Minimum Wage could put a significant strain on many small businesses’ cash flow. Bibby Financial Services can help ease the cash flow worries of UK businesses by providing an immediate injection of cash against the value of outstanding invoices giving firms access to an immediate and ongoing supply of cash that grows as the business grows.”

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