National Minimum Wage

The National Minimum Wage (NMW) has been set to increase from 1st October with the main rate going up by 20p to £6.70p per hour. All the new rates are as follows:

The rates from 1st October 2015 will be:                                    Rate        Fluctuation

Main rate for workers aged 21 or over                                           £6.70              +20p

Workers aged between 18 and 20                                                 £5.30               +17p

Workers aged between 16 and 17                                                 £3.87               +08p

Apprentice Rate for those apprentices under

19 (or 19 or over and in 1st yr of apprenticeship)                           £3.30              +57p

This change affects every employer and they need to ensure that all staff regardless of circumstance will now be paid at least the above national minimum rates otherwise they could face penalties.

With these changes to the pay rates, employers might need to review all salaries to ensure pay grades are still proportionate to avoid the possibility of any grievances related to pay.

This year not only have we got these increases but also the introduction from April 2016 of the National Living wage. This will effectively be a new NMW band for the over 25’s starting at £7.20p per hour.

Please remember this when awarding pay or other benefits. The likelihood is that this rate may well increase year on year in line with the NMW increases so businesses need to factor this extra cost into pricing and budgets for the forthcoming year.

While George Osborne suggested that the living wage would have a modest impact on business costs, most business leaders don’t agree and are worried that this may lead to job losses or price increases. Sainsbury’s former CEO suggests job losses, while Costa and Premier Inn are suggesting price increases; ultimately this modest cost on business is expected to run to tens of millions of pounds according to the CEO of Morrisons.

Some recruitment companies are already feeling the effects of this, with Manpower saying some employers are putting pre-Christmas hiring on hold.

Only time will tell what the overall effect will be; on the one hand employees will receive pay more commensurate with the cost of living while this has to be funded by someone. Government hopes businesses will take this on while businesses are looking for customers to front this, effectively hitting the same population the legislation is aimed at helping.

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