Prior to the introduction of the new National Living Wage (NLW) in April 2016, the National Minimum Wage (NMW) increased on 1 October each year.
The NMW will now increase each April, and from 1 April 2017 the new rates will be as follows:
- The NLW, for those aged 25 and over, will increase from £7.20 to £7.50 per hour.
- The standard adult rate for those aged 21 to 24 will increase from £6.95 to £7.05 per hour.
- The development rate for those aged 18 to 20 will increase from £5.55 to £5.60 per hour.
- The young worker rate for those aged 16 and 17 will increase from £4.00 to £4.05 per hour.
- The rate for apprentices (aged under 19 or in the first year of their apprenticeship) will increase from £3.40 to £3.50 per hour.
As before, basic pay or salary, bonuses and commission and any piecework payments count towards the NMW. Benefits, pension contributions and shift premia or allowances do not.
There are a number of potential consequences of not paying the NMW. As well as fines and potential criminal sanctions, employers can be ‘named and shamed’. In addition, employees can bring claims against their employer, either in relation to not being paid correctly or if they are subjected to a detriment (such as dismissal) for taking action in relation to their NMW rights.
The government has pledged to increase the NLW to £9 by 2020, but it remains to be seen whether it will manage to do so, as that promise was made before the Brexit vote in 2016. If our departure from Europe affects economic growth, it may not be possible to reach that target.
If you have any questions on any of the issues raised in the above article, please contact Seanpaul McCahill.