The National Minimum Wage is the minimum pay per hour almost all workers are entitled to by law.
The National Minimum Wage rate per hour depends upon your age and whether you are classified as an apprentice. Furthermore, you must have left school for the wage increase to apply.
The previous rates for National Minimum Wage:
Age 21 and Over – £6.50 per hour
Age 18 to 20 – £5.13 per hour
Age Under 18 – £3.79 per hour
Apprentice – £2.73 per hour
However now the national minimum wage increase has come into practice as an employer you can NOW expect to pay:
Aged 21 and Over – £6.70 per hour
Aged 18 to 20 – £5.30 per hour
Aged Under 18 – £3.87 per hour
Apprentice – £3.30 per hour
If you are an employer, it is compulsory to implement these correctly – it is a criminal offence not to pay someone the National Minimum Wage. If you have discovered that you have unfortunately paid a worker below the minimum wage, you must pay any arrears to the affected employee immediately.
In proposals announced on September 1st by the Business Secretary, penalties for non-payment of both the National Minimum Wage and National Living Wage could be doubled. It has also been announced that specialist teams will be set up within HMRC to deal with such instances.
The obvious and immediate impact will be on the company’s finances, increasing the minimum wage will mean your workers are being paid more which means there will be a boost in morale for your employees. A negative effect might be to think about your current number of employees and how a wage increase will impact on finances.
If you are an employee who is affected by the minimum wage rates you can expect a pay rise, however small it may be!
Questions you may have to ask yourself when you consider the increase in National Minimum Wage could be:
If your wage hourly rate employees have received an increase, are you able to supplement that increase by increasing their supervisors annual salary? As a knock on effect, the manager you employ to supervise your employees may expect an initial pay increase.
If your business is a large enterprise and employs over 200 people, how will this affect your profits? A harsh reality may mean staff cuts to ensure you can afford the increase.
The new National Living Wage is an essential part of the government’s strategy to move from a low wage, high tax and high welfare society to a higher wage, lower tax and lower welfare society.
This is to ensure that employment pays for an individual to live and reduces the reliance on the state topping up wages through the benefits system.
From April 2016, the government will introduce a new mandatory National Living Wage (NLW) for workers aged 25 and above, initially set at £7.20 – a rise of 50p relative to the upcoming National Minimum Wage (NMW) rate, forecast to rise to £9 by 2020.
The living wage is an hourly rate set independently and updated annually. It is calculated according to the basic cost of living in the UK. Employers can choose to pay the Living Wage on a voluntary basis – with Lidl being the first supermarket to do this.
If you need information or advice on the NMW increase, contact KA Farr & Co for professional advice for your business.