12 August 2010
The National Minimum Wage (“NMW”) was introduced in 1999 and created an obligatory threshold pay level to protect workers from unacceptably low rates of pay. The Government has recently published the National Minimum Wage Regulations 1999 (Amendment) Regulations 2010 (“the Regulations”) which amends the National Minimum Wage Regulations 1999. The Government estimates that just under 1 million low paid workers are likely to benefit from the NMW rate increases contained in the Regulations. The Regulations come into force on 1 October 2010 and apply to the whole of the United Kingdom.
New rates
The Regulations increase the
hourly rate of the National Minimum Wage (NMW) for adults and
provide that 21 year olds must be paid at least this rate. They
also increase the hourly rates for 18-20 year olds and 16-17 year
olds and increase the maximum amount for living accommodation that
is allowed to count towards pay for NMW purposes (the
“accommodation offset”).
NMW rates from October 2010
| Age band | October 2009 rate | October 2010 rate |
|---|---|---|
| Adult rate (for workers aged 21+ from 2010) | £5.80 | £5.93 |
| Development rate* (for workers aged 18-20) | £4.83* | £4.92 |
| 16-17 year old rate | £3.57 | £3.64 |
| * The development rate covered 18-21 year olds in October 2009 |
Apprentices
Apprentices who are either
aged under 19 (or who are over 19 and in the first year of their
contract of apprenticeship) do not currently qualify for the NMW.
The Government has decided that this exemption from the NMW for
apprentices should be replaced with an apprentice minimum wage.
This rate will be £2.50 per hour from October 2010, which is
broadly equivalent to the current £95 per week minimum currently in
place in England. This change is important given the increase in
the number of apprenticeships over the last twelve years (rising
from 65,000 starts in 1996/97 to 240, 000 in 2008/09 in
England).
Consolidation proposed
The NMW Regulations
have been amended many times and the Government is aware of the
need to consolidate these Regulations into one statutory
instrument. The Department for Work and Pensions plans to issue a
consolidated version of these Regulations in 2011.
Hill Dickinson has a wealth of experience in dealing with the full
range of employment and pensions issues. If you have any queries
relating to the above, or any other legal matter, please do not
hesitate to contact us
for advice.
