Minimum wage on the rise

While many UK businesses are worrying about the financial impact of the National Minimum Wage increase, due in October 2006, Bibby Financial Services (BFS) is warning businesses not to forget about the impact it will also have on their back office systems and how they will cope with the administrative changes associated with the rise.

Under the new National Minimum Wage, workers will get a 30p rise to 5.35 an hour, the rate for workers aged 18-21 will rise by 20p to 4.45, while workers aged 16 and 17 will get a 30p rise to 3.30. Despite over 4.3 million small businesses being affected by these changes, the majority do not have a dedicated HR or finance department leaving them to struggle with the changes to important financial administration, such as payroll, PAYE and VAT.

Steve Hollings, BFS spokesperson, said: ìDespite the current strength of the economy and the number of new jobs available, there has been concern from both the British Chambers of Commerce and the CBI about how small businesses will cope financially with this rise in wages. However, little air time has been given to the complexity of implementing these changes and how small companies with few members of operational staff will manage the rise in wages from an administrative and payroll perspective.î

Small to medium-sized companies need to start planning now to identify what effect the wage rise will have on their financial administration process and evaluate if they have the expertise in-house and if they donít they need to make sure they take action sooner than later.

ìOwners and managers are constantly bombarded with red tape and have to keep up with the ever-changing legislative landscape, leaving them precious little time to worry about the administration involved in the changes to the minimum wage. As a result, many companies prefer to outsource these types of administrative tasks, such as payroll to specialist providers such as Bibby Financial Services who have expertise in-house, leaving them free to concentrate on core tasks such as growing the business,î said Hollings.