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 April 2017, new rates will come into force as follows:
- The National Living Wage for workers aged 25 or older will increase from £7.20 to £7.50 per hour.
- The rate for workers aged 21 to 24 will increase from £6.95 to £7.05 per hour.
- The development rate for workers aged 18 to 20 will increase from £5.55 to £5.60 per hour.
- The young workers rate (non-apprentices aged under 18) will increase from £4.00 to £4.05 per hour.
- The apprenticeship rate will increase from £3.40 to £3.50 per hour.
These new pay rates will only affect someone’s pay from the first full pay reference period after 1 April. For example, if someone’s pay reference period runs from 25 March to 24 April, the increased rates will not apply to that pay reference period but will take effect for that running from 25 April to 24 May, because this is the first full pay reference period after 1 April.
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 that in itself will not give rise to a policy change.
Non-payment of the NMW
It is against the law to pay eligible workers less than the NMW and a worker who believes they are being underpaid has the right to complain to their employer as well as to HMRC, who can investigate the complaint. HMRC have recently launched a campaign to increase employees’ awareness of their rights to be paid the NMW and to raise a complaint if they are not and you can read more about that campaign and excuses employers sometimes use to excuse a failure to pay here
Payment of the NMW can pose difficulties in some particular areas, including in relation to employees who travel between appointments as part of their working day or those who are required to “sleep in” at their employer’s premises. The penalties for not paying the NMW are severe so if you have any concerns that your business may not be compliant, we would strongly encourage you to take urgent advice.
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