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Agricultural wages reform could prove a headache for cash-strapped farm businesses

New reforms may help staff moral but they are another headache for farm businesses in the current economic climate, says Mark Morison, Partner at Berrys in Shropshire.

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New wages reform may help staff moral but they are another headache for farm businesses in the current economic climate, says Mark Morison, Partner at Berrys in Shropshire.

April 1 will see the introduction of the Government’s New Living Wage in England.

All workers aged 25 and over, who are not in their first year of an apprenticeship, will legally be entitled to at least £7.20 an hour – a rise of 50p relative to the current National Minimum Wage rate. This rate will increase year on year.

Minimum wage rates from 1 April 2016, including the National Living Wage will be:

  • £7.20 per hour for those aged 25 and above
  • £6.70 per hour for those aged 21 to 24
  • £5.30 per hour for 18 to 20 year olds
  • £3.87 per hour for 16-17 year olds
  • £3.30 per hour for an apprentice
  • The accommodation offset rate is £5.35.

“The Government has announced that the enforcement budget for the National Minimum Wage and Living Wage will be increased in 2016 and 2017,” said Mark.

“Paying workers correctly is essential and employers face stiff penalties or even prosecution if they fail to do so.

“New penalties are tougher and seek to ensure increased compliance. The calculation of penalties for those who do not comply will rise from 100 per cent of arrears to 200 per cent. This will be halved if employers pay within 14 days. The overall maximum penalty of £20,000 per worker remains unchanged.

“The Gangmasters Licensing Authority will also monitor whether workers are being paid the National Living Wage in the same way as it currently assesses the payment of the National Minimum Wage,” he explained.

There are four recommended steps for employers seeking to prepare for the introduction of the National Living Wage:

  1. Check who is eligible in your organisation. Find out more information on the Gov.UK Employment status page
  2. Update payroll for each worker to ensure you are paying the correct amount
  3. Let staff know about their new pay rate in writing
  4. Check workers under 25 are earning at least the right rate of National Minimum Wage.

“In Wales the new Agricultural Wages (Wales) Order came into force on 26 February 2016, meaning workers in Wales will receive an average six per cent pay increase based on previous minimum pay rates,” he added.

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