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Archive: Jan 2016

Living wage 2016. Are recruiters and end users ready?

Living wage becomes law

In April 2016, the national living wage will become law. Workers aged 25 or over (and not in the first year of an apprenticeship), will be legally entitled to at least £7.20/hour. The Government is increasing this every year, so by 2020 it’ll be more than £9/hour. There are more details available for both employees and employers directly from the government here

Our MD, Jovan Pavlicevic commented:

“The increase in NMW is met every year with the same chorus. Many end clients expect recruiters to soak up the difference and insulate them from rising costs. Savvy recruiters start their communications early, to help end clients understand that increases aren’t simply profiteering but are inevitable to stay on the right side of the law. We’ll be publishing a whitepaper soon to help our agency clients communicate this more effectively to their end users”.

So here are our top tips for recruiters

1.  Increase your charge rates
Four words that sound simple, but can be difficult to achieve. You know why you need to do it, but what about how?

2.  Break it down
Instead of just sending a blunt email advising rates are going up by 10%, try breaking your charge rate down into digestible bites:

NMW = a
Holiday pay = b
ERNI = c
Pensions = d
Margin = e
VAT = f

Add them together to get to your charge rate – by demonstrating the working like this, you might be surprised at the reaction you get. We’re often amazed how many end user FDs scratch their heads and guess that ERNI is 8 or 9%…

3.  Don’t forget your money is now worth less!
(That’s worth less… Not ‘worthless’). What we mean here is that the upward pressure at the bottom of the wage scale means your pay rate of £10/hour from 2003 (when you last increased your charge rates!) is now not cutting it in the real world. £10 buys a lot less than it did last year, so the message is that all rates need to bump up – not just those near the living wage.

4.  Get your PR started early.
Speak with end users about the living wage, and start today. Get in touch with us for your free whitepaper and use it to help educate your client base – the more thorough you are now, the less headaches you’ll face in April.

5. Get your supply chain in line.
Another no-brainer, but often overlooked. Do you know how your suppliers are paying your temporary workers? Onshore, offshore, umbrella, CIS, EDM, Ltd co, loans or EBTs? There are a million options out there so educate yourself and make sure you’re aligned with best of breed suppliers and partners.

We can help you navigate the changes and maintain margin. Contact us today and join our list of happy clients!

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