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Why failing to pay minimum wage won’t solve your cashflow problems
14 March 2017

Most businesses should be looking for ways to reduce their business costs. This is a smart way to do business and can result in a real increase your profits.

What you should do

Reducing business costs can be achieved in a variety of ways, such as:

  • negotiating  with suppliers for discounts
  • outsourcing specific projects instead of hiring full-time employees
  • stream-lining business practices
  • operating a more energy efficient office (e.g. using energy saving bulbs, turning equipment off at night, reducing printing).

What you should not do

Some businesses have been trying to cut their costs by not paying their workers the relevant minimum wage. This is against the law and HMRC will find out. So, you should not do this.

However, some business owners are trying to get away with this illegal practice. Here are some of the excuses that business owners have given to HMRC for their failure to pay employees minimum wage…

  1. “I didn’t think they deserved the minimum wage as they were not a very good worker.”
  2. “Young workers working without pay for their first three months is part of UK culture as they’re still proving their worth.”
  3. “She only makes teas and sweeps the floor so she doesn’t deserve minimum wage.”
  4. “All my workers have signed a contract that states they don’t get paid minimum wage so they’ve all agreed.”
  5. “My employees think of themselves as self-employed so the minimum wage doesn’t apply to them.”
  6. “I only pay my shop workers when they’re actually serving customers, most of the time they are just stood around waiting.”
  7. “My employee is still training up so they aren’t entitled to minimum wage.”
  8. “The minimum wage does not apply to my business.”

However, none of these reasons are valid.

Currently the National Minimum Wage is £7.20 for those who are 25 and over but that will increase to £7.50 in April 2017 when the National Living Wage comes into effect. It is something every business should be aware of, along with the changes to minimum wage in each age bracket.

A better was to deal with cashflow issues

If your company is having cash flow problems, there are a number of ways to try and reduce your business costs. Failing to pay the National Minimum Wage is not one of them.

For advice on what options you have, contact us at Clarke Bell today.

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If you are worried about your business or just want a (free) no obligation chat, contact Clarke Bell on 0161 907 4044 or [email protected] today. Our Licensed Insolvency Practitioners will provide you with the best professional advice for your situation.

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