News & Insights

Increase In The National Minimum Wage From 1st October 2016

By Bilal Sheikh 21.09.2016
Increase In The National Minimum Wage From 1st October 2016

At SF Group we are always keen to keep you updated with legal changes in the employment market, and we wanted to remind you that as of 1st October 2016 the National Minimum Wage (NMW) will increase.

The NMW applies to all workers and is paid at different rates according to age.

The current and future rates for the minimum wage (which represents gross pay) are as follows:

Age Rate from 1 April 2016 – Rate from 1 October 2016

  • Workers aged 25 £7.20 an hour – £7.20 an hour
  • Workers aged 21+ £6.70 an hour – £6.95 an hour
  • Development rate – 18-20 £5.30 an hour – £5.55 an hour
  • Young workers rate – 16-17 £3.87 an hour – £4.00 an hour

Rates for apprentices under 19, or over 19 and in the first year of the apprenticeship are also increasing from the current £3.30 an hour to £3.40 an hour.

The minimum wage rates are reviewed annually and have been updated in October, but from 2017 they will be updated in April.

Key points;

  • All workers, except those who are genuinely self-employed, are entitled to receive the NMW/NLW
  • Gross pay is used to calculate whether an eligible worker has been paid the minimum wage
  • The NMW/NLW is calculated by including most financial awards or payments, but excluding allowances such as regional or on-call allowances, unsocial hours payments, tips and gratuities, or any benefits in kind, with the exception of accommodation up to a specified amount
  • Employers can average the hourly rate of pay over the pay period
  • Non-compliance can result in an enforcement notice requiring the employer to pay the difference between what was actually paid and what the worker should have received under the NMW legislation. Further non-compliance could result in the issue of a penalty notice and financial penalties.
Bilal Sheikh
Bilal Sheikh Senior Recruitment Consultant