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Tim Jones  

Partner, Head of Employment

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New National Minimum Wage rates announced

 

Article date:  23/03/2015

The government has announced the National Minimum Wage rates to take effect from 1 October 2015. The recommendations of the Low Pay Commission (LPC) have been accepted, with the exception of the apprenticeship rate.  The apprentice rate will see its largest ever increase of 57p to £3.30 per hour, 50p higher than that of the LPC recommendation.

The new rates from 1 October 2015 will be as follows: 

  • The adult rate will increase by 20p to £6.70 per hour
  • The rate for 18 to 20 year olds will increase by 17p to £5.30 per hour
  • The rate for 16 to 17 year olds will increase by 8p to £3.87 per hour
  • The apprentice rate will increase by 57p to £3.30 per hour
  • The accommodation offset increase from the current £5.08 to £5.35 

These represent  the largest real-term increases in the National Minimum Wage since 2007, and more than 1.4 million of Britain's lowest-paid workers are set to benefit from the 3% rise.

Prime Minister David Cameron has said that the increases will offer more financial security to workers, and in particular, encourage more young people to see apprenticeships as a promising career choice.  However, the Director General of the British Chambers of Commerce has suggested that the rise in apprenticeship rate may negatively impact demand for apprenticeships among those firms that are only just getting by.

Views on the government's announcement are mixed. Whilst some believe that setting the minimum wage too high will lead to fewer job opportunities, the general secretary of TUC, Frances O'Grady, said the rate increases would go nowhere near enough to end "in-work poverty".

Labour has promised the minimum wage would rise to £8 per hour over the course of the next parliament if it wins in the May general elections.

For companies that employ individuals at or around the National Minimum Wage level, they will need to schedule and plan for the increases set out above and factor the changes into future business planning.  

For more information, please contact the employment team on 0845 111 5050.

View all articles for 2015

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