New National Minimum Wage Rates

The rates for the National Minimum Wage are due to increase from 1st October 2016.

The National Minimum Wage (NMW) rates will increase from 1st October 2016. The recently introduced National Living Wage (NLW) remains unchanged.

Who does it apply to?

The living wage applies to employees who are 25 or older and starts at £7.20/hour, with plans to increase to £9/hour by 2020. 

If you’re a director, the National Living Wage and National Minimum Wage don’t apply and so you don’t have to worry. However, if you have employees it’s an extra layer of complexity to think about. 

New Rates

The statutory rates from 1st October 2016 are as follows:

 

Rate

Age Range

Apprentice

£3.40

In first year of apprenticeship, no qualifying age.

Under 19 and in apprenticeship.

NMW

£4.00

Under 18

 

£5.55

18-20

 

£6.95

21-24

NLW

£7.20

25 and over

 

What penalties could apply?

The penalties of not paying the National Minimum/Living Wage are heavy. You will have to pay arrears at very short notice, have further penalties applied (up to 100% of the arrears with a maximum of £20k per worker) and be ‘named and shamed’ by HMRC - even for as little as £100 underpayment. To date, around 400 employers have been named along with the amount they neglected to pay.

What to do next

Should you check and find you haven’t been paying the National Minimum Wage before now, you must increase the current rate and pay arrears based on the current rate immediately. Please contact us if you think this could be the case.

You can have a look at HMRCs NMW calculator, but you can also contact your account manager if you want to talk about this in more detail, or send us through your employee’s average monthly hours if you want us to check your compliance.

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