How Will the 6th April Changes Impact UK Contact Centres?

“It’s a 6.7% increase in national minimum wage, which is huge. That doesn’t actually affect contact centres as much as we all are talking about.

Because actually our average salaries are beyond that, so our average salaries in the industry are just over £24,000 at the moment, expected to be nearer to £25,500 by the end of the year.

And actually right here, right now, if you’re paying minimum wage, an average salary, the salary you’re paying your agent is just over £22,000.

So, for the majority of the industry we’re not going to feel any consequences of the increasing national minimum wage.

However, there is still a significant population of our agents who are paid national minimum wage and they’re predominantly in outsource, for all the reasons we all understand, that there’s such a tight pressure on margins.

But there are still some commercial direct businesses paying national minimum wage as well so they will certainly feel that increase.”

“The second change which is what I say is certainly hurting our industry more is that increase in the National Insurance contributions, because that will affect every single employee that you have.

It doesn’t matter what they earn, well it does actually, but the threshold is so small it won’t affect our industry under the threshold, but anyone who you pay more than £5,000 a year as of the 6th of April, you are now going to be paying 15% NI on their salary, as opposed to the current 13.8%.

Now that’s a 1.2% increase, which doesn’t sound much on the face of things, but when you consider that a standard agent who’s earning £25,000 is now going to cost you over £800 more a year to employ, it suddenly sharpens our focus slightly on how much of an impact that has on our industry. So, the National Insurance contributions are significant, and are going to really hurt.”

“At the moment as employers we only pay National Insurance on employees that earn more than £9,100 with us.

So, we will have some employees, it’s not a great amount of our working population in contact centres, that only earn up to £9,000.

They’re part-time people, they’re working probably, I don’t know, 10, 12, 15 hours a week for you, and you might be getting them without having to pay any NI on them.

However, the government has reduced that threshold, and now you have to pay NI on anyone earning $5,000 or more.

So, suddenly part-timers might fall into the NI threshold that they didn’t before.”

“In contact centres we’re not reducing staff numbers, we’re not seeing people do that.

We are seeing people trying to invest in technologies and efficiencies to be able to do that, but what we’re not willing to do is reduce our customer service offering, because if we drop our customer service and our CX, then we lose our customers anyway.

So, we can neither really easily pass those costs on to the customer, because for all the obvious reasons, and no one is really happy to go “no problem I’ll just take that cost out of my huge profits that I’m making”, because all of us are laser focused on our bottom line.”

“I think rather than just reading the headlines and thinking what can I do, the obvious things that we can do as businesses to reduce our costs and suck up some of these increased costs.

We’ve got to remember the side effects of them, and that’s how the agents themselves are being affected.

We’ve got to remember that the consequence of this is very likely, and we know already from the data, that workers will pay for this, because whereas last year as an industry we gave salary increases of nearly 7% on average, this year we’re not giving anything like those increases in salary, because we’re paying for the tax out of that budget. So, agents aren’t going to get the type of increases that we were forecasting before we knew the budget, and they are in a cost-of-living crisis already.

An average agent who is earning £25,000 takes home about £1,700 a month NET. It costs them, for just their basics £2,000 a month – £1,200 on rent, £300 on groceries, utilities at about £190, and it just goes up.

And £2,000 a month it costs an agent to live, and we’re paying them NET £1,700 – they are going into debt month on month, they are living off credit cards, and because we’re not going to be paying them the increases in salary because of the hits on NI we are causing more vulnerability in agents.”

“I think we’ll definitely see a big increase in team leader salaries this year, because of the gap in salaries closing. The consultancy that I’m doing on salaries at the moment is the team leaders that we’re probably expecting the biggest proportion increase on this year.”

“For me the biggest consequence of all of these changes and the knock-on effect to the business, is where we are finding space to reduce salaries is actually further up the chain.

So, we’re seeing people cut out middle management, we’re seeing people grow sizes of teams to reduce team leaders, we’re seeing some of the support services being cut.”

“What’s happening there is we’re increasing the team leader’s job, so the team leader is becoming really bottlenecked in doing a whole multitude of jobs, that perhaps used to be done by different experts, just while the agents are getting more and more vulnerable, and needing more support and guidance.

So, there’s a big knock-on effect there, that we have to really look after those team leaders, support them with the right EAP programmes to support their staff with, bolster the HR teams, ready for a really bumpy ride this year, I think, with agents.”