From October 1st the NMW rises by 3.011%, increasing the charge rate for Agency users. But does the increase benefit the Agency aswell as the Agency Worker?
Obviously the increase in basic pay also increases the Employers NI and Pension liabilities, but there exists associated costs that are not passed onto the Agency user. The approximate 3% increase in NMW is reflected in a 3% increase on the invoice rate, which in turn is a 3% increase in financial exposure of the Agency to its Client. With increased demand for longer payment terms, HEADS immediately require more cash and risk in order to pay the workers each week, which all comes with direct and indirect associated costs.
Add to this the short term increase in administration costs and increased consultancy time, any amendments in NMW hurts the pockets of the Agency more than any other party.