HM Insights

Don’t get caught out – new National Minimum Wage rates increase from 1st October

As is now customary, statutory wage rates are due to rise on 1st October. The National Minimum Wage (NMW) is to increase from £6.70 to £6.95 from 1 October 2016. Since the introduction of the National Living Wage rate on 1 April this year, this rate now only applies to workers aged 21 to 24 years.

Minimum Wage Changes

The increase follows the government’s decision to accept recommendations put forward by the Low Pay Commission (LPC).

The Youth Development Rate, covering 18- to 20-year-old workers, is also to increase from £5.30 to £5.55, while the rate for 16- to 17-year-olds is to increase from £3.87 to £4.00.

In addition, the accommodation offset increases from the current £5.35 per day to £6.00 per day, again from 1 October.

While no recommendation has yet been made in respect of any increase to the National Living Wage rate, fixed at £7.20 when it was introduced in April, it is also part of the LPC's remit to consider what, if any, increase should be applied to it from April next year.

What do employers need to do?

Employers should:

  • know the age and birthday of all new workers and ensure they are paid as a minimum the correct rate for their age
  • keep track of workers' birthdays and increase their hourly rate when they move into a new age band
  • keep track of hours worked to ensure that the hourly minimum wage rates are being adhered to

What do employers need to know?

  • It's a criminal offence to pay below the applicable NMW rates
  • The rates apply not just to employees but to anyone considered to be a worker – and includes those on zero hours contracts
  • HMRC has the right to investigate employers and, where it finds a breach, impose a fine on the employer

Get in touch

If you would like further information on the above or anything else related to work or employment, please contact Dawn Robertson on 0131 247 3345 (or [email protected]) or your usual HM contact.

The small print: This blog is for information purposes only and should not be construed in any way as providing legal advice.