Employers - Additional costs to take into account when budgeting staff costs for next year.
Costs are only going one way for employers and unfortunately that is not down. While increasing wages and putting more money in everyone’s pockets is a great idea and most employers would welcome that as a sentiment. However we need to keep an eye on reality and keep ourselves as competitive as possible while maximising our net take home pay. No point in cutting off our nose to spite our face!
For employers when setting your budget for 2024 you will need to factor in these increases into your staff costings. To maintain you current labour cost %’s you will either need to increase prices (easier said than done) or reduce your overall labour cost.
So what additional costs do I need to take into account:
1. Minimum Wage
Currently the Low Pay Commission is expected to recommend to the Government that it increases the minimum wage next year by 12%. This would increase the minimum wage from €11.30 to €12.70. The government have plans to introduce a living wage to replace the minimum wage which will be set at 60% of the median wage. More details to be announced closer to budget day....
2. Auto-enrolment Pension Scheme
This new pension scheme for employers will be funded by employers and employees with the state providing a further top up. Employee contributions will be matched by Employers. This will be an additional cost for the employer that they will need to take into account and is effective from 1st January 2024.
3. Sick Pay
Statutory Sick pay in 2024 will be 5 days . This is an increase from 3 in 2023 and will increase to 7 in 2025 and then 10 in 2026. Remember employees must be certified by a GP as unable to work for them to qualify for statutory sick pay.
4. Payroll Administration
From the 1st of January 2024, employers will be required to report details of certain payments made to employees and directors. This is known as Revenue's "Enhanced Reporting" and the onus is on the employer to submit these details. The items this will cover includes the Small benefit, remote working allowance and travel and subsistence payments.
To Summarise
To summarise, successful business owners manage their staff and labour costs by monitoring KPI’s. These may include Labour cost % and productivity per employee. Making best use out of your employees means managing this valuable and costly resource in your business is a key part of the strategic success of an organistion,
Remember, now more than ever, you will need to adopt effective strategies to manage employee costs. Read our blog on “Effective Strategies for managing your staff costs”.
Author..
John Carolan ACMA, CEO of Solve Outsource
Contact Email: john@solve.ie
