It is that time of year when the National Minimum Wage (NMW) rates increase.

The minimum amounts which must be paid from 1st October 2016 are as follows:

  • The standard adult rate for 21 to 24 year olds increases from £6.70 to £6.95 per hour
  • The development rate for 18 to 20 year olds increases from £5.30 per hour to £5.55 per hour
  • The young workers rate for 16 to 17 year olds increases from £3.87 per hour to £4.00 per hour
  • The rate for apprentices under 19 or over 19 and in the first year of their apprenticeship increases from £3.30 per hour £3.40 per hour

Please note that the National Living Wage (NLW) rate for those aged 25 years and over remains at £7.20 per hour effective from April 2016 (to be reviewed prior to April 2017)

  • All workers are entitled to be paid the NMW/NLW except those who are self- employed
  • The NMW/NLW is calculated by including most payments but excludes things like on call allowances, benefits in kind, tips and gratuities or payments for working anti-social hours

Risks for Companies who don’t comply with NMW

  • Enforcement action and the Company would be required to back pay the amount that was underpaid in breach of the regulations
  • A penalty notice could be issued against the Company
  • Financial penalties against the Company
  • There is also the possibility of negative publicity about the Company
  • Recruitment & staff retention could become more difficult
  • There could be an impact on client/supplier relationships etc.

What should you do to ensure compliance with NMW?  

  • Ensure that all employee information is up to date and accurate, including employee dates of birth
  • Ensure your payroll team are aware of these changes and data entered where appropriate if using a manual system rather than software

The Future

The Government has asked the Low Pay Commission to monitor NMW rates taking in to account several factors including the state of the economy, employment and unemployment levels, the labour market and relevant policy changes. The Government’s objective is to have the NLW over £9 by 2020

If you have any queries in relation to the National Minimum Wage or the National Living Wage, please do not hesitate to contact the HR Consultancy team who are always happy to help and can be contacted on 01484 439930.