Ahead of the Budget, the government has announced changes in the rates of the National Minimum Wage to apply from 1 October this year, as recommended by the Low Pay Commission. The October changes do not apply to the minimum wage for over 25s, now designated the ‘National Living Wage’, which will already have taken effect at £7.20 an hour on 1 April this year. From 2017, all increases will take place in April each year, so the October 2016 increases will remain in place for just six months.
The October changes are as follows:
The hourly rate for those aged 21, 22, 23 and 24 will be £6.95 (up 3.7 per cent on the current £6.70).
The hourly rate for those aged 18, 19 and 20 will be £5.55 (up 4.7 per cent on the current £5.30).
The hourly rate for those aged 16 and 17 will be £4.00 (up 3.4 per cent on the current £3.87).
The apprentice rate (for apprentices aged 16, 17 and 18, and those aged 19 and over who are in their first year) will be £3.40 (up 3 per cent on the current £3.30).
Finally, the accommodation offset will be increased to £6.00 a day. This is a 12.1 per cent increase on the current £5.35 and is being accelerated following the Low Pay Commission agreeing that its daily level should increase significantly.
Martin Couchman, Deputy Chief Executive of the BHA, said: “The increases in the hourly rates for those aged under 25 are very much in line with expectations, reflecting the Low Pay Commission’s objective for younger workers (those under 25) which is ‘to recommend a rate that should not reduce employment.’ We were pleased to see that the daily offset is at last moving ahead, better reflecting the cost and value of the provision of staff accommodation. There remain concerns about the impact of all the hourly rates increasing in April 2017, just six months after the October rises, and the British Hospitality Association will be submitting detailed evidence on this to the Low Pay Commission over the coming months.”
The Department for Business, Innovation and Skills has issued guidance on calculating the National Minimum Wage. You can access it here.