Minimum wage increase: what are the changes?

Businesses employing apprentices and staff under the age of 25 will need to prepare for the upcoming changes to the National Minimum Wage.

Following the increase of the National Living Wage for over 25s in April, from 1 October 2016 the National Minimum Wage rates for under 25s and for apprentices are being increased.

In the UK 95% of employers pay workers at or above the National Minimum Wage rate and therefore do not fall into the small minority that currently underpays. However, those employers who fail to comply with the new rates could find themselves having to pay a penalty of up to 200% of the arrears amount as well as be ‘named and shamed’ by the Government. With the Government taking a tough stance and HMRC already investigating over 70,000 employers, it is vital to make sure you are prepared for the changes.

The main changes to national minimum wage rates are below:

Affected bands Current Rate New Rate (from 1 October 2016) Increase
Adult Rate, affecting 21-24 year olds £6.70 an hour £6.95 an hour 3.7%
Youth Development Rate, affecting 18-20 year olds £5.30 an hour £5.55 an hour 4.7%
16-17 Year Old Rate £3.87 an hour £4.00 an hour 3.4%
Apprentice Rate £3.30 an hour £3.40 an hour 3%

 

It is important that you find out which of your staff are eligible for the new rates and that you communicate the changes to them. You will also need to update your payroll in time for 1 October.

You can find further information on HMRC’s employers’ National Minimum Wage page. To discuss your payroll requirements you can contact us on 01903 234094.

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