Minimum wage price hike adding to a 'perfect storm' for farming

October’s minimum wage hike is adding to a ‘perfect storm’ of legislative change affecting the farming and agriculture sector, says an expert at the UK200Group of independent chartered accountancy and legal firms.

John Thame, partner at chartered accountants Ellacotts and chair of UK200Group’s Agriculture Industry Group, says that while the 20p rise is not exclusive to the sector and every business must face the questions posed by auto-enrolment and National Living Wage (NLW), the developments nevertheless cap off a summer of challenge.

Since July, farmers have been facing bigger bills for workers’ holiday pay, with legislation forcing employers to calculate rates based on actual earnings rather than basic pay. It has proved an issue because of the sector’s dependence on overtime during seasonal demands like harvest.

“It is easy to think of rural enterprises with few staff and, therefore, able to somehow bypass this legislative change,” Mr Thame said.

“But as farmers know full well, this is simply not the case. Anyone in receipt of the minimum wage must now be paid more, while just one employee is enough to compel a business to engage with the demands of auto-enrolment.

“The industry is of course not alone in these matters, and others too must face the demands of holiday pay increases. But in a sector where there are particularly busy times and therefore overtime, hikes to holiday pay can significantly increase farmers’ costs when income is already burdened. With employees able to back-date claims for up to two years, the challenges are suddenly coming in multiple directions at once and it rather feels like a perfect storm.

“I think the sector is able to cope, but businesses would do well to avoid navigating the changes alone. Errors in compliance may create bigger headaches down the line.”