From next April all hospitality businesses will have to pay staff over the age of 25 £7.20 per hour, a 50p rise on the current minimum rate.
But the Department for Business, Innovation and Skills (BIS) has raised concerns that employers are risking breaking the law by failing to properly prepare ahead of the rise taking effect.
Just 45 per cent of businesses have updated their payroll ahead of April 2016 and only 39 per cent have discussed the changes with staff, according to a BIS survey of 1,000 UK employers.
Business minister Nick Boles said: “I am urging businesses to get ready now to pay the new £7.20 rate from 1 April 2016. With just under 4 months left, there are some easy steps employers can take to make sure they are ready."
Pwc estimates that the Living Wage will cost the hospitality industry £13.2m by 2020.
Wetherspoon boss Tim Martin has warned that the Living Wage could put a strain on jobs in the already pressured pub sector, resulting in a wave of closures in less affluent areas.
Meanwhile Mitchells & Butlers – which owns All Bar One, Browns and Harvester – has claimed that diners will ultimately ‘pay the price’ for a hike in wages with restaurants becoming more expensive to balance extra costs.
According to figures released by BIS today, 93 per cent of employers believe the Living Wage will have a positive impact on their businesses with 83 per cent stating it would make staff ‘more loyal’ to their employers.
This contrasts to a survey of hospitality operators by BigHospitality’s sister publication M&C Allegra Foodservice, which found that 73 per cent saw rising wages as having a negative impact on their business with just 60 per cent agreeing that the wage hike would improve staff retention and recruitment.