National minimum wage changes
26 October 2016
The major change this October is the increase to the National Minimum Wage (NMW), with the rates rising as follows from 1 October:
- Workers aged 21 to 24: £6.95 (from £6.70)
- Workers ages 18 to 20: £5.55 (from £5.30)
- Young workers aged under 19 but above compulsory school age who are not apprentices: £4.00 (from £3.87)
- Apprenticeship rate: £3.40 (from £3.30)
The new National Living Wage (NLW) of £7.20 per hour which applies to workers aged 25 and over is unaffected, although it will be uprated in April 2017.
Some key points to remember around the wage rules are:
All workers, except those who are genuinely self-employed, are entitled to receive the NMW/NLW.
- Gross pay is used to calculate whether an eligible worker has been paid the minimum wage.
- The NMW/NLW is calculated by including most financial awards or payments but excluding allowances such as regional or on-call allowances, unsocial hours, payments, tips and gratuities, or any benefits in kind, with the exception of accommodation up to a specified amount.
- Employers can average the hourly rate of pay over the pay period.
- Non-compliance can result in an enforcement notice requiring the employer to pay the difference between what was actually paid and what the worker should have received under the NMW legislation. Further non-compliance could result in the issue of a penalty notice and financial penalties.
There have been some high profile cases in the news lately around non-compliance with minimum wage legislation.