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 about National Minimum Wage (NMW) levels, and the potential cost implications associated with this legislation.
In fact, almost a third (31%) of small business owners and managers in the UK are not fully aware the NMW is going to increase on 1 October. Uncertainty among smaller businesses with just four employers and under is particularly rife, with 44 per cent claiming to be completely unaware of the planned increase.
When it comes to understanding the actual NMW rate for adults aged 22 and over, there is equal confusion. Almost a third (32%) say they donít know what the exact rate is while a quarter (24%) 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 workersí rights when it comes to issues such as minimum wage and health and safety.
Looking at the 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.
David Robertson, global chief executive of Bibby Financial Services, says: ìIt 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 childrenís 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.
ìAt 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 businessesí 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.î
Confusion reigns among SMEs 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
