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Changes to the National Minimum Wage from October

From 1st October, the National Minimum Wage rates will increase, make sure you’re not caught out!

The new rates will be:

  • £6.95 per hour for those aged 21-24 years old
  • £5.55 per hour for those aged 18-20 years old
  • £4 per hour for those aged 16-17 years old

£3.40 for apprentices under 19 or those who are 19 and above but still within their first year of apprenticeship.

The National Living Wage (NLW), for workers aged 25 and over, the rate of £7.20 remains unchanged.

Employers paying output workers, including home workers, piece rates (payment according to the number of items produced or tasks completed) must either pay the minimum wage for every hour worked, or a ‘fair piece rate’ (currently set at 120 per cent of the NMW).

The minimum wage rates are reviewed annually and have been updated for October, but from 2017 they will be updated in April.

Key points to remember;

  • 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.

The National Living Wage (NLW) for workers aged 25 and over, set at £7.20, came into effect from 1 April 2016. The government expects the rate to rise to over £9 by 2020 (a government policy paper explains the thinking behind the NLW).

The government has announced increases to the National Minimum Wage rates to take effect from 1 October 2016. From 2017, increases to both the NLW and NMW will take place in April.

If you need any help or advice please contact our Payroll Manager, Marie Ben-Ali, on 01704 546000.