NI Tax Rises To Hit Prices

Cosmetics company Lush and car repair chain Kwik Fit are among firms which have warned they will raise prices due to an increase in employers' National Insurance (NI). Other firms have told the BBC they will reduce how much profit they make, freeze hiring or in some cases cut jobs to cover the higher costs. From Sunday, employers will have to pay NI at 15% on salaries above £5,000, instead of 13.8% on salaries above £9,100 currently. The Treasury said the billions raised will be spent on public services, including the NHS. Lush told the BBC that with 3,600 employees in the UK and Ireland, it would have to find an extra £2.7m per year. Kasey Swithenbank, Lush's retail head for the UK and Ireland, said: "We are going to be taking small incremental price changes. Kwik Fit, which employs about 5,000 people, estimates the NICs rises will cost it £5m. This will have a knock-on effect on prices, and recruitment, said Mark Slade, its managing director.  The rate that employers pay in contributions will rise from 13.8% to 15% on a worker's earnings above £175 per week. The government expects about 940,000 firms to pay more, 250,000 companies to pay less, and 820,000 to see no change.

BBQ - How would you deal with the NI increase if you ran your own business?

NI Increase

 

Lidl Raises Pay Ahead of Minimum Wage

 

Lidl's recent announcement of a pay raise for its UK staff, pre-empting the national minimum wage increase, signals a significant move in the retail sector. As reported by the BBC, this £39 million investment translates to a 4% to 10% pay rise for 26,000 employees, exceeding the upcoming minimum wage. This proactive approach likely stems from a need to attract and retain talent in a competitive market, boost morale and productivity, and enhance the company's reputation. While the move is positive, it also raises questions about the ability of smaller businesses to follow suit, the potential for wider wage inflation, and the long-term sustainability of such practices. Ultimately, Lidl's decision sets a new benchmark for employee compensation and highlights the increasing pressure on businesses to address the cost of living crisis and value their workforce.

BBQ - Discuss the potential benefits and drawbacks for Lidl of implementing this pay rise, considering factors such as employee motivation, recruitment, and profitability.

Lidl Minimum Wage

Workers Rights Change

The UK government is introducing a major overhaul of workers’ rights through the Employment Rights Bill, which includes several significant changes aimed at benefiting millions of workers. Key reforms include granting sick pay from the first day of illness and allowing unpaid parental leave from the start of employment, removing the previous two-year qualifying period for unfair dismissal protections, and introducing a nine-month probation period. Additionally, the bill proposes making flexible working requests a right from day one of employment. These changes are designed to provide greater job security and flexibility for workers, reflecting the evolving nature of the workforce and the increasing demand for work-life balance. While business groups have generally welcomed the reforms, there are concerns about the practical implementation, particularly for smaller firms that may face challenges in adapting to the new regulations. The government emphasizes that these changes aim to strike a balance between being pro-worker and pro-business, ensuring that the UK remains an attractive place to work and do business.

BBQ: How might the introduction of immediate sick pay and parental leave from day one of employment affect small businesses and their approach to employee management?

Workers Rights