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Monday, 27 June 2016 09:40

Information to help you from the National Hairdressers' Federation with pensions and the minimum wage

Half a million small businesses will need to start offering a pension this year – is yours one?

More than half a million small and micro businesses will need to begin offering pensions to their staff during 2016, and salons urgently need to check whether theirs is one of them, the NHF has warned.

Pensions auto-enrolment is the nationwide change in the law making it compulsory for businesses of all sizes to offer, and pay into, a workplace pension for their employees. The Pensions Regulator estimates that around 512,000 small and micro businesses will hit their "staging date" in 2016, requiring them to offer a pension.

A recent survey of NHF members suggested that nearly half expected to hit this deadline during 2016, yet, worryingly, a fifth admitted they still did not know when their staging date would be. The Pensions Regulator has a "Finding your staging date" tool on its website, thepensionsregulator.gov.uk.

As it can take as long as a year to set up and organise a pension scheme, salons are urged not to ignore the arrival of this change – especially as the fines for not offering a scheme when you should can be as high as £50,000.

The NHF has set up a pension scheme specifically for salons, which is open to members and also to non-members. It has published a guide to auto-enrolment for employers, and one for employees.

There is guaranteed acceptance onto the NHF pension scheme for hair and beauty businesses referred by Habia/SkillsActive, just quote membership number 1234567 on the registration page at www.nhfpensions.co.uk or call them on 01234 831965.

NHF president Paul Curry said: "Many salons still aren't up to speed on their new legal responsibilities but pensions auto-enrolment is something salons cannot afford to ignore. The NHF can help with its pension scheme, guides and events - so use us and make sure you're not caught out by this very important change".

Minimum Wage 'triple whammy', warns the NHF

One month on from the arrival of the £7.20 an hour National Living Wage for over-25s, hairdressing, barbering and beauty businesses are facing the grim prospect of having to fund two further wage rises within the next 12 months.

The government announced in March that not only will National Minimum Wage rates rise once again in October, but from next year both the minimum wage and living wage will be "uprated" together from April.

This move to align the National Minimum Wage with the National Living Wage means that, if the rates increase at each opportunity, salons will experience three wage bill increases between April 2016 and April 2017.

From October, the National Minimum Wage rates for those aged 21-24 and 18-20 will both rise by 25p, to £6.95 an hour and £5.55 an hour respectively. The rate for 16-17 year-olds will increase by 13p to £4 an hour and the apprentice rate will rise by 10p to £3.40 an hour (see the panel below for the full figures).

But NHF president Paul Curry warned the cumulative effect of significant wage rises, on top of the additional costs of pensions auto-enrolment, risked pushing many salons to the edge financially.

"While some of these increases can be passed on to customers, the danger is it'll also mean salons will have to consider freezing recruitment, reducing training, reducing hours or cutting back on staff," he said.

Current level

From April 2016

From October 2016-April 2017

Increase

Adult rate (21+)

£6.70

National Living Wage (25+)

£7.20

£7.20

n/a

Adult rate (21-24)

£6.70

£6.95

+25p (3.7%)

Youth development rate (18-20)

£5.30

£5.55

+25p (4.7%)

16-17 year-old rate

£3.87

£4.00

+13p (3.4%)

Apprentice rate*

£3.30

£3.40

+10p (3%)

*The apprentice rate applies to those aged 16-18 training on an apprenticeship and to those aged 19 or over who are in the first year of an apprenticeship, after which they are paid at the appropriate age-related rate.