New holiday pay regulation
I had heard a little about this but not really taken on board the implications, and it seems that many business owners are completely unaware of them. New European legislation (of course) now means that staff who receive commission now have to be paid commission as part of their holiday pay, as if they’d been at work. Currently under appeal are rights to also get overtime, shift allowances and weekend premium pay. This is bad news for any business that employs staff on this basis, so I’m thinking manufacturers and companies with sales teams.
As if that weren’t bad enough, claims can potentially be made going back as far as 1998, so for some firms this could be a significant liability. PPI type claim companies are already surfacing encouraging employees to consider a claim against their employer. I’m told however that there ARE ways to mitigate this risk.
I appreciate these are scant facts so I’ll get some expert opinion for you next week. In the meantime, if this could affect you I’d suggest you get some advice from your employment law advisor, and start building the extra payments into your budget, or rework how you pay people to keep it cost neutral.
Pay Pressure
I remember predicting that this could become a real problem, with staff having been on minimal rises, if at all, for the last few years. However it seems I was wrong. The main view is that there is little pay pressure at the moment, and those asking for rises are being given performance measures to achieve to earn the pay rise. And I’m not seeing my clients budget for anything more than inflation rises in the next year either.
However, coupled with the effect of the skills shortage, which in construction and tech companies is getting pretty bad, companies are finding when recruiting staff that they’re having to pay more than they current pay for that role.
General outlook and business confidence
This is where I was really surprised. I’m still seeing in my business and those of my clients, that things are looking very good, sales up year on year, profits on the up with strong cash-flow. But there seems to be a growing level of uncertainty; issues such as the election, imminent interest rate rises and financial issues still prevalent in Europe and the terrorism threats are all contributing to this. It seems exporters to Europe are understandably concerned. Bank are all reporting a marked drop in lending since July, with business owners putting investment decisions on hold.
And the MPC are worried. They’re looking for feedback from the regions, as they’re seeing real evidence of a slowdown across the board in this quarter, and of course they’re focussed on when interest rises are going to start.
So, what to make of all that?
Make sure you’re looking ahead as far as you can, keep your forecasts updated and a close eye on what your customers are up to. But I would say don’t let this financial uncertainty become a self fulfilling prophecy. Businesses with a really clear vision of where they’re going will achieve their plans regardless of the economy.
Don’t forget, next week we’ll have more on that pesky employment law issue and how to stop it hitting your bottom line.