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Preparing for the National Living Wage

Over the past couple years, businesses throughout the UK began to see annual increases to the National Minimum Wage, transitioning to the National Living Wage, and making changes to how implications were felt from businesses as well as employees. There are multiple concepts to consider in alignment with the National Living Wage, as businesses and recruiters continue to learn the processes in place and stay in alignment with rules set.  

Fleet Management Implications

There are several common mistakes that employers make when it comes to the National Living Wage, including worker status errors, deduction errors, the inclusion of payments and so on. However, the biggest two mistakes to avoid when it comes to fleet management, and business management overall, centre around unpaid working time and underpaying workers or drivers.  When it comes to drivers and employees that work unstructured hours varying throughout the year or even vary on a weekly basis, it can be challenging to keep up with when the employee is on work time or personal time. When an employee is unpaid for time that they spent working it is most often for short periods of time for “down time” or time between assignments. However, if not monitored, tracked, and paid accordingly, there could be costly consequences based on the regulations of the National Living Wage. 

The next highest common mistake for the National Living Wage faced by employers in the UK, and especially for fleet managers, comes with underpaying workers. The most common mistake seen is when missing birthdays and annual rate increase mandates that are not moved when a worker transitions from one age band to another. Age bands become especially challenging for fleet managers as many employees may be in the 25 and under category, where an employee quickly transitions between four age bands between the ages of 18 – 25. Additionally, the rates for the National Living Wage adjust every April, so the consideration of monitoring the calendar throughout the year for a business owner becomes essential. 

Another challenge for fleet managers and the National Living Wage can be seen with drivers that have sleep-time built within their schedule if they have overnight or weekly drive schedules and patterns. If an employee, or driver, has to be at a certain location and cannot reasonably leave down to sleeping purposes, it is likely that they will be classified as working during that time based on the National Living Wage standards. This means compensation is required for the set time period paid versus unpaid to meet the minimum pay requirement for their age band.

As we have reviewed, there are multiple areas to consider as an organisation when preparing for the National Living Wage and the implications for business structure. But the good news is that there are many resources available to business owners, recruiters, fleet managers, and anyone interested in learning more about the National Living Wage. When handled appropriately, retention and positive influence to employees will help to continue driving the business forward. 

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