Historically, the National Minimum Wage (“NMW”) has been reviewed in October each year following recommendations from the Low Pay Commission. In April 2016, the Government introduced the National Living Wage as the top slice of the NMW structure and also announced changes to other NMW rates to come into force from 1 October 2016. From April 2017 onwards, National Living Wage and NMW rates will be reviewed and increased at the same time.
From 1 October 2016, new National Minimum Wage (“NMW”) rates will come into force as follows:
- The rate for workers aged 21 to 24 will increase by 3.7% to £6.95 per hour.
- The development rate for workers aged 18 to 20 will increase by 4.7% to £5.55 per hour.
- The young workers rate (non-apprentices aged 16 – 17) will increase by 3.4% to £4.00 per hour.
- The apprenticeship rate will increase by 3% to £3.40 per hour.
- The accommodation offset limit will increase to £6.00.
The accommodation offset is a benefit in kind that can count towards the NMW and is the maximum daily sum that employers who provide accommodation can deduct towards those costs.
The National Living Wage remains at £7.20 per hour for workers aged 25 and over. Future increases of the National Living Wage will take into account “the state of the economy, employment levels and relevant policy changes”, however, the Government has already announced in the aftermath of the Brexit decision that in itself will not give rise to a policy change.
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