By Charlotte Caldwell of Hill Dickinson
The government has announced today that the national minimum wage will increase by 20p per hour to £6.70 from 1 October 2015.
The rise, which amounts to 3%, will benefit over 1.4 million low-paid workers and is the biggest real time rise in seven years.
The hourly rate for younger workers and apprentices will also increase in October. The hourly rate for 18 – 20 year olds will increase from £5.13 to £5.30 per hour (3%) and 16 and 17 year olds will receive £3.87 per hour, an increase of 2%.
The statutory minimum wage for apprentices will also increase by 20% to £3.30 per hour. This is higher than the suggested figure of £2.80 for an apprentice which was recommended by the Low Pay Commission. This rate applies to apprentices aged 16 to 18 and those aged 19 or over that are in the first year of their apprenticeship. All other apprentices are entitled to the national minimum wage for their age.
The Government’s decision to raise the hourly rate of pay will be a welcome announcement for those earning the minimum rate of pay. The decision, which appears to provide a balance between raising the earnings of the lowest paid workers by an amount which is affordable to businesses, should also be a welcome boost for the economy.
Employers must make sure that from October 2015 that their workers are paid the new rate of national minimum wage. Aside from the moral argument that paying less than the minimum wage is unacceptable, it is also illegal. Employers who ignore the rules and fail to pay the minimum wage must pay the unpaid wages and face financial penalties of up to £20,000. There are also clear reputational risks involved; the Government will continue to publish details of employers who fail to pay the minimum wage.