New national minimum wage rates announced

New national minimum wage rates announced

Published:

Author: Katy Meves

Applies to: UK wide

Draft legislation implementing increases to national minimum wage rates from 1 April 2017 has been published.

National minimum wage

From 1 April 2017 the rates for the national minimum wage will rise as follows (figures in brackets show the current rate):

  • Workers aged 25 and over: £7.50 (£7.20)
  • Workers aged 21 to 24: £7.05 (£6.95)
  • Workers aged 18 to 20: £5.60 (£5.55)
  • Young workers aged under 19 but above compulsory school age who are not apprentices: £4.05 (£4.00)
  • Apprenticeship rate: £3.50 (£3.40)

National living wage

The national living wage for workers aged 25 and over came into force last year, on 1 April. At the time, the government announced that its target was to increase the national living wage to £9 an hour by 2020.

The national minimum wage was previously uprated every year in October but, from 1 April 2017, all national minimum wage rates including the national living wage will be uprated at the same time.

The national living wage should not be confused with the 'Living Wage' or 'London Living Wage' which is an entirely voluntary hourly rate of pay promoted by the Living Wage Foundation. It is set independently and updated annually to reflect the basic cost of living in the UK.

Penalties and non-compliance

Employers need to ensure that they comply with the new rates as the penalties for failure to do so are now significant: 200% of arrears (halved if employers pay within 14 days) up to a maximum penalty of £20,000 per worker.

Many examples of non-compliance are not intentional but occur as a result of administrative failings. For example, employers need to make sure they have the correct systems in place to identify when workers have a birthday and move from one rate to another.

Comment
The increase in minimum wage rates will also increase other costs such as pension contributions and national insurance contributions so organisations need to factor these into budgets for the coming year.

Disclaimer

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

About the Author

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Katy Meves

Professional Support Lawyer

03700 86 6971

Katy has over ten years experience as an employment lawyer in both external and internal client facing roles. Her experience encompasses pensions, share options and data protection. Katy's work for external clients has been mainly advising large corporate employers.

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