Autumn brings the wind of change for wages

02 October 2015

In his latest blog post, senior solicitor, Oliver Tasker, looks at October's changes to national minimum wage rates and what next year's introduction of the national living wage will mean for employers.

It’s that time of year again when the National Minimum Wage increases and the following hourly rates apply from 1 October 2015:

  • The standard adult rate (21 and over) is £6.70.
  • The development rate (between 18 and 20) is £5.30.
  • The young workers rate (under 18 but above the compulsory school age who are not apprentices) is £3.87.
  • The rate for apprentices is £3.30.

The accommodation offset will also increase to £5.35 each day.

2016 - the year of the National Living Wage

Businesses also need to be aware of the national living wage (NLW) which will be implemented from April 2016. This will see a new minimum wage rate of £7.20 for workers over 25, which is an increase of 50p compared to the new national minimum wage rate as of 1 October 2015.

We have seen a number of large national employers such as Lidl, Starbucks and Morrisons grabbing the headlines by confirming that they will go beyond the new NLW when it starts in April next year, but it is the Small to medium-sized enterprises (SMEs) that are likely to feel the impact. Our advice is that now is the time to start to plan for this increase as the Government’s aim is to increase the NLW to £9 by 2020.

It is anticipated that this will boost the pay for around 6 million UK workers but the Office of Budget Responsibility predicts that the knock-on effect is that it may result in job losses across many sectors that are heavily reliant upon the minimum wage, including the farming community and the care sector. The other impact is that employers may be more attracted to applicants that are under 25, so we urge caution to ensure that no age discrimination claims are alleged during your recruitment process.

As always, our specialist employment law experts can help you plan for this change by guiding you through commercial and practical options for your business from recruitment to potential restructuring. If you'd like any help, please do get in touch.

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