Business News
Changes to the National Minimum Wage
October 2009 saw the introduction of a number of changes to the National Minimum Wage (NMW) regulations.
Main adult rate to rise
The National Minimum Wage rates increase with effect from 1 October 2009.
The new rates are as follows:
| Age | Hourly Rate |
| 16-17 | £3.57 |
| 18-21 | £4.83 |
| 22 and over | £5.80 |
The change stems from the recommendations made by the Low Pay Commission (LPC), which reviews NMW rates on an annual basis on behalf of the Government. While the Confederation of British Industry has welcomed the modest increase, the Chartered Institute of Personnel and Development has warned that the move could increase the risk of job losses in the low-paid sectors.
Furthermore, employers who are found to be in breach of the NMW legislation are now subject to automatic penalties, ranging from £100 to £5,000. This is in addition to the wages already owed to the employee. From October 2010, 21-year-olds will be included in the main adult rate of the NMW.
Tips and service charges
In addition, from 1 October 2009 employers will be banned from using tips and service charges to bring the wages of bar and restaurant workers up to the statutory levels.
A recent case in the Court of Appeal concluded that employers must not take into account tips, gratuities, service charges or cover charges when paying the NMW, unless these are paid to employees through the employer’s payroll.
The Government is working with consumer and business groups to identify ways of increasing transparency and clarity for consumers, with a new industry code of best practice.
Consultation on apprenticeship pay
Meanwhile, the Government has asked the LPC to consider introducing a minimum wage for apprentices. Under the current legislation, apprentices aged 18 years or less are exempt from the NMW, as are those aged 19 or older who are in the first year of their apprenticeship. From August this year Learning and Skills Council apprentices are guaranteed a weekly pay rate of £95.
The LPC has been asked to report its recommendations to the Prime Minister and Secretary of State for Business, Innovation and Skills by the end of February 2010.
Need help?
If you need help or advice the National Minimum Wage Helpline can assist employees, employers and any other interested parties. The confidential helpline is open Monday to Friday 9.00am to 5.00pm (tel: 0845 6000 678).
For more information on the National Minimum Wage, visit the Your Business – Essentials section of our website.
