Minimum Wage Increases from 1st October 2015
When you are completing this month’s wages, remember that the minimum wage increased on the 1st October 2015. This isn’t a recommendation it is a legal requirement.
The new minimum wages are as follows:
- the adult rate is now £6.70 per hour
- the rate for 18 to 20 year olds is now £5.30 per hour
- the rate for 16 to 17 year olds is now £3.87 per hour
- the apprentice rate is now £3.30 per hour
The apprentice rate should be used with caution. This rate is for apprentices (completing an official apprenticeship) aged 16 to 18 and those aged 19 or over who are in their first year. All other apprentices are entitled to the National Minimum Wage for their age.
Whilst discussing rate increases, do not forget that from April 2016, the government is introducing a statutory National Living Wage (NLW) to all workers aged 25 and above (as previously mentioned in our Summer Budget round up).
The NLW will be initially set at £7.20 per hour, an increase of 50p per hour for the relevant workers. I recommend that you work out now if this will affect your business, if so by how much.
You should also consider the rest of your workforce. If you have two workers that are currently on the minimum wage and need a 7.5% pay rise to comply with the new regulations, are you going to apply that pay rise across all workers, all teams or are only the affected individuals going to get a pay rise? How will that affect morale? Is it fair? What will a 7.5% pay rise look like across the workforce as a whole?
You should also remember that auto-enrolment, another mandatory cost to your business is coming in soon, and that will also affect your wages bill.
I will be discussing this with all my effected clients before next February and I recommend that you speak to your accountant about it before this tax year is complete. If you would like to discuss this potential issue, please get in touch.