As of 1 October 2015, the annual round of National Minimum Wage (NMW) increases came into effect, with the rate for anyone aged 21 and over going up to £6.70 from £6.50. The most significant increase was to the apprentice rate, which was hiked up from £2.73 to £3.30.
But many workers on the minimum wage will not have to wait another year to see further increases. Employees aged 25 years or over will benefit from the new “National Living Wage” (NLW) which is set to be introduced from April 2016 and will override the NMW rates for anyone in this age bracket. Employers will need to pay a minimum of £7.20 per hour to any of their staff who are 25 and over from April. The Low Pay Commission will recommend future rises to the NLW, with the expectation that it will reach £9 per hour by 2020.
NLW is not replacing NMW and the latter will continue to apply to any employees under the age of 25. However, many retailers have pre-emptively raised the pay packets of their lowest earners to the NLW or higher, irrespective of age. Costa are reportedly paying £7.40 to their trained baristas (£8.20 in London) and Aldi has vowed to introduce a new £8.40 minimum rate for its employees from February 2016.
It should be noted that the NLW, which employers will be required to pay by law from April 2016, is distinct from the living wage set by the Living Wage Foundation. The rate set by the foundation - described as “an independent calculation that reflects the real cost of living” - currently stands at £8.25 (and £9.40 in London).
The most important piece of advice I would give to any business owner who is considering their affairs, eventual death and inheritance tax planning, is to make sure that they have a will.
Sometimes lots can be talked about with partners, co-directors and particularly professionals such as accountants and independent financial advisers, only for the most simple and obvious aspect to be missed.
Making a will can also highlight many issues that should be considered. In practical terms, any business owner should consider how their interest in the business would be dealt with in the event of their death.
Often it is unlikely that the spouse or children would want the shares in the business, they would generally be more interested in getting a fair price for the business. This brings up further complications, such as whether a surviving business partner would pay a fair price or indeed whether they could afford to pay a fair price.
What is certain is that it is best to address these issues before anything happens. If you don't, it is highly likely that there will be acrimonious disputes and the main beneficiaries will be the lawyers who are paid to fight over things.
So what can be done? Our advice would be to look at setting up what is called a cross option agreement. These are generally simple and inexpensive to set up. They give the surviving business partner the option to purchase the shares from the estate of the deceased.
The business partners could give thought in the agreement as to either the price payable for the business or how the price should be calculated, thereby avoiding any long-running dispute on this point. Shareholder and partnership agreements should be drawn up to make sure that what you want to happen on death does happen.
The second part to this would be how the surviving business partner could afford to purchase the shares. What you would generally expect is for the business partners, at the same time as setting up the cross option agreement, to put life policies in place that pay out on death to the surviving business partner.
The surviving business partner would then use the proceeds of the policy to buy the shares in accordance with the terms of the cross option agreement. What would be vital is that the life policy be written into trust, so that the policy proceeds are not liable to inheritance tax. However, it is very important that the trust document is correctly drafted, appointing trustees and naming the correct beneficiaries. Professional advice should be sought.
Most business interests in trading companies qualify for business property relief. This means that they are either not liable to inheritance tax or are only liable at a rate of 50%. You should also bear in mind that spouse's are exempt from inheritance tax. Therefore, when writing your will you should consider whether it would be an option to leave the shares in the business to people other than the spouse, such as your children.
If you leave the exempt shares to your spouse, you are essentially leaving an exempt asset to an exempt beneficiary and wasting the tax exemption. However, you may be uncomfortable in leaving the shares direct to your children for fear of leaving your spouse without enough to live on.
One alternative, therefore, is to leave the shares, by will, into a 'discretionary trust'. The beneficiaries of that trust would generally include the surviving spouse and the children. Decisions can then be made very easily after the business owner's death as to who actually inherits the shares, taking account of the circumstances existing at that time and where possible ensuring that the entire estate, including the business interest, is dealt with as tax efficiently as possible. The key is flexibility. Such discretionary trusts can easily be included into a standard will and should not cost more than £450 to £500 plus vat.
Finally, Business Property Relief can be very valuable. However, you only qualify for it if you have owned the shares for two years immediately before your death. If you or an elderly relative owns such shares and they're likely to die in the near future then it is vital that the shares are not given away or sold prior to death, because then the valuable relief will be lost and the proceeds of sale would be taxable, potentially at 40%.
Sick days are estimated to cost UK businesses £29bn per year and our staff take up to four times the amount of sick leave compared to our global competitors. New businesses (like any other) can't risk having staff who are integral to their success costing them money through unauthorised absences. The problem should be nipped in the bud early on.
Even if your start-up only has a few employees, you should have a formal policy on staff absences. Setting up an absence reporting procedure and consequences for unauthorised absences makes your position clear from the get-go. Too much leeway early on only causes problems in the future.
Absence reporting should be done over the phone rather than via text or email, with the staff member having to give a clear reason for their absence. Failing to follow the procedure should have repercussions, be that withholding sick pay or taking disciplinary action. Include a clause in your employment contracts that allows you to request a medical report from employees. This could be necessary in the case of long-term absences or increasingly frequent sick days.
Monitoring absences can reduce the frequency and costs of staff absence, but too many businesses fail to properly monitor their staff. The smaller your business, the simpler monitoring staff absences should be.
A proactive approach, which takes into account general attitude, productivity at work, and key dates that might tempt employees to stay off work, can be useful. As a start-up, your business is unlikely to have an HR professional to deal with recording staff absences and that's where HR software can help. It can automatically monitor staff absence levels and tell you when they are getting too high, as well as ensuring your business complies with the relevant legislation.
Once you have a procedure for absence reporting and monitoring, you'll want to look at how your business can reduce absences and keep unnecessary costs down. Currently, few businesses set targets for reducing absences, but as a start-up, implementing absence reduction tactics early on will prove beneficial.
While disciplinary action is one way to reduce unauthorised time off, prevention strategies such as well-being programmes have been linked to reduced absenteeism and increased productivity and could therefore be worth pursuing.
Following these three simple steps and putting in place measures to make staff accountable for their absences will pave the way for effective absence management in your business and benefit your start-up in the long-run.
Copyright © 2105 Stuart Hearn, who has 20 years' HR experience and is CEO of OneTouchTeam, an online staff leave planner and HR system for small businesses. Connect with Stuart on Twitter @onetouchteam.
Many businesses use images every day, whether it's to launch a new product, give a presentation or for a social media campaign. But, how many of us question whether we are legally entitled to use the image?
Failing to ensure that an appropriate release is in place can result in organisations of all sizes finding themselves in hot water.
Even if an image is readily available, caution must still be paid to how and where it is used and whether a release needs to be in place before you proceed. A release is a signed document that ensures that the people or property (works of art, trademarks, brands or buildings) featured in an image or clip are safe to use.
While most stock image collections clearly identify where a release has been signed, further limitations may be in place, so it pays to always double check. But it's not just image releases that need to be considered.
Copyright and IP law is complex to navigate. For example, if you're searching for an image using Google Images you may automatically think that it's safe to take your selected images and use them to promote your business or on your blog, but that isn't always the case.
Google has tried to make this easier by introducing search tools functionality, which includes a usage rights filter. Simply type in your search term, click on the 'images' tab below the search bar, then 'search tools' and finally 'usage rights'. You will be presented with four clear options:
To check the licence of each image, click on the image in the Google search results, then select 'visit page' and the licence details should be listed. Sometimes you will find images that are free to use under a creative commons licence but, even then, Google can't confirm that all the licences are annotated correctly. Google places the responsibility of image use firmly with the user, so make sure you read their full guidelines before using any image for your business.
London Underground is holding last ditch negotiations with unions in an effort to avoid two 24-hour tube strikes planned for this week.
The strikes are over pay and working shifts as the Mayor of London, Boris Johnson, and London Underground attempt to bring a 24-hour service to London's underground system.
If the tube strikes go ahead, it will mean yet another wave of disruption for businesses since the 24-hour service was announced back in September 2014. The Federation of Small Businesses estimates that the strikes in February cost businesses up to £600 million, with cancelled meetings and staff absences accounting for a large proportion of the losses.
So what are your rights when strikes hit? Do you still have to pay employees who don't make it in to work?
As an employer, you are not automatically obliged to pay your employees if they can’t work.
Much will depend on your contracts of employment and any policies that you may have to cover absences.
These may set out how much effort you expect employees to make in order to get to work in the event of strikes, bad weather or other events. Can they walk, cycle or drive to work if they normally take the tube?
Your policy may also set out whether they will be paid if they cannot make it in to work, or whether they are expected to take unpaid leave or holiday. Having a clear policy avoids misunderstandings and disputes and so can save you money.
With advance notice, it may be possible for some workers to carry out their duties remotely or from home. You could allow employees to alter the place or times of work, perhaps starting and finishing early to avoid the traffic or queues for buses, making up hours at another time. This option could allow your business to keep functioning.
When making such arrangements, you must make sure you do not discriminate against any of your workers. Furthermore, if employees decide to work from another location, you must make sure that health and safety obligations are met and that the location and equipment are suitable for the work being done.
You should also consider whether it is unsafe or too difficult for employees to come to work. Expecting an employee to come in to work unreasonably could amount to grounds for a grievance claim, so caution is advised. Firing someone for not turning up could land you in hot water – unless there is a pattern of absence to back your decision up.
Generally speaking, if there’s travel disruption employers can ask staff to take paid holiday (annual leave) if they give notice that is at least double the length of time they want employees to take in annual leave. So for one day’s annual leave it would be two days notice.
That said, it's worth using your discretion and consider paying your employees as a gesture of goodwill – after all, it isn’t their fault if they can't make it in and keeping your staff happy is good business practice.
Whatever you decide, you should make it to clear what you expect. For example, that employees should make every effort to make it in to work; that they should communicate with you if it is not possible; and informing employees whether they will be paid if they don't show up or whether the absence will be taken from their holiday allowance.