National Minimum Wage
Increase
National Minimum Wage
Following the changes recommended by the Low Pay Commission, the rates of National Minimum Wage (NMW) announced in March 2016 came into effect for pay periods starting on or after 1 October 2016. The changes are:
- the rate for 21 to 24 year olds will increase by 25p to £6.95 an hour
- the rate for 18 to 20 year olds will increase by 25p to £5.55 an hour
- the rate for 16 to 17 year olds will increase by 13p to £4.00 an hour
- the rate for apprentices will increase by 10p to £3.40 an hour
National Living Wage
Workers aged 25 and over are entitled to the National Living Wage (NLW), which is set every April following its introduction this year. It is currently £7.20 per hour and this is unchanged.
Most workers in the UK, over school leaving age, are legally entitled to be paid at least the NMW or the NLW and all employers have to pay the relevant rate if the individual is entitled to it. It makes no difference:
- if the employee is paid weekly or monthly, by cheque, in cash or in another way
- if the employee works full time, part time or any other working pattern
- if the employee works at the business premises or elsewhere
- what size the business is
- where the business is in the UK
Penalties
The penalties for employers failing to pay the NMW or the NLW can include:
- Payment of arrears to workers affected
- Payment of a penalty to the Secretary of State amounting to up to 200% of the total underpayment subject to a maximum penalty of £20,000 per employee
- Disqualification from being a company director for up to 15 years
- Criminal Prosecution and stiffer penalties for the most serious cases
If you would like more information in connection with this please contact our Tax Director, Jenny Marks.
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