Company Performance Linked to Employee Pay

7th November 2013

We came across an interesting article from HR Magazine recently, which looked at the risks that businesses can run by underpaying their employees. Below, we have summarised accordingly.

A recent study from the Business, Innovation and Skills (BIS) department has yielded results that the performance of a modern company can be directly linked to the salaries of its workers. Employers who offer low rates of pay can find their reputation damaged and their productivity down.

Over 2,000 employed candidates responded to the survey and the findings showed that 80% of those asked wouldn’t buy products/services from a company paying below minimum wage. The same proportion of people also said that they would actively inform friends and family to follow suit. Even more people (90%) thought that these companies were a “disgrace.”

The government is currently working through a scheme to “name and shame” employers who aren’t paying fairly and legally. A spokesperson said that offending businesses are now risking a financial penalty and potential prosecution.

In light of the survey results and government reform, last month the following changes were made:

• National Minimum Wage for adults has risen to £6.31 from £6.19
• National Minimum Wage for 18-20 year olds has risen to £5.03 from £4.98
• National Minimum Wage for 16-17 year olds has risen to £3.72 from £3.68
• National Minimum Wage for apprentices has risen to £2.68 from £2.65

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