Minimum wage increases
New National Minimum Wage (NMW) and National Living Wage (NLW) rates come into effect on 1 April 2018. The NLW first came into effect on 1 April 2016 and is the minimum hourly rate that must be paid to those aged 25 or over. The NLW increases by 33p to £7.83. This represents an increase of 4.4%.
The hourly rate of the NMW increases to £7.38 (a rise of 33p) for the 21-24 year old’s. The rates for the 18-20 year old’s, increases to £5.90 (a rise of 30p) and the rate for workers above the school leaving age but under 18 increases to £4.20 (a rise of 15p). The NMW rate for apprentices increases by 20p to £3.70.
The new rates mirror the recommendations made by the Low Pay Commission (LPC) which were accepted in full by the Government. The independent LPC was established following the National Minimum Wage Act 1998 to advise the government on the NMW. It is made up of representatives from all sides of industry.
HMRC investigates all complaints of employers failing to pay minimum wage, and there are significant penalties for employers found to have paid workers less that they are entitled to by law. HMRC’s enforcement budget has significantly increased the number of officers investigating minimum wage complaints.
The new National Minimum Wage (NMW) and National Living Wage (NLW) rates are due to come into effect on 1 April 2017. This is the first time that the NMW and NLW rates will be uprated in parallel. Historically, the NMW increased annually in October and explains the smaller than usual increase in the NMW as the last increases were only effective on 1 October 2016.
The hourly rate of the NMW will increase to £7.05 (a rise of 10p) for adults 21-24 year olds. The rates for 18-20 year olds increase to £5.60 (a rise of 5p) and the rate for workers above the school leaving age but under 18 will increase to £4.05 (a rise of 5p). The NMW rate for apprentices increases by 10p to £3.50.
The new NMW rates mirror the recommendations made by the Low Pay Commission (LPC) which were accepted in full by the Government. The independent Low Pay Commission (LPC) was established following the National Minimum Wage Act 1998 to advise the government on the NMW. It is made up of representatives from all sides of industry.
The NLW came into effect on 1 April 2016 and has been set at £7.20 per hour. The National Living Wage is the minimum hourly rate that must be paid for those aged 25 or over. From 1 April 2017 the National Living Wage will increase by 30p to £7.50. This represents an increase of 4.2%.
The LPC did consider the uncertain economic prospects as a result of Brexit over both the short-term and long-term however the wage rates have increased in line with their original pre-Brexit intentions. This was done with the caveat that should the economic situation worsen the minimum wage rates may not increase as expected in the future.