New national minimum wage advice and information.
In response to recommendations made by the Low Pay Commission, the government has announced it will be increasing the national minimum wage by 19p to £6.50 per hour.
The adult minimum wage rate will increase about 3% from £6.31 to £6.50 an hour, the rate for 18 to 20 year olds will rise by 2% from £5.03 to £5.13 and the rate for 16 to 17 year olds will also rise by 2% from £3.72 to £3.79 along with a 2% increase for apprentices, from £2.68 to £2.73.
Business Secretary Vince Cable commented that ‘the recommendations accepted mean that low-paid workers will enjoy the biggest cash increase in their take-home pay since 2008,’ so good news then! He described the increase as ‘marking the start of a welcome new phase in minimum wage policy’. The rise to £6.50 an hour is expected to be the first of many above-inflation rises after a Treasury report said the minimum wage should be restored to pre recession levels.
Although the latest rise is undoubtedly a positive move, the national minimum wage is still well below the definition of low pay, as set by the the Organisation for Economic Co-operation and Development (OECD).
Professor Sir George Brain (founder of the low pay commission and minimum wage) suggests there are many industry sectors that could easily afford to pay more than the minimum wage. He also recommends that the Low Pay Commission give longer term forecasts for the benchmark, to help employers plan for the future.
The new rates will be implemented in October and will benefit over a million workers throughout the UK who will see their annual pay increase by as much as £355 in the first ‘real terms’ cash rise since 2008.
If you are an employer or a prospective candidate and you need advice about the new minimum wage please get in touch to find out how we can help.
Minimum wage fines for employers.
A new maximum fine was introduced on 1 February 2014 for companies that continue to pay less than the national minimum wage.
Prime Minister David Cameron announced last year that fines on employers failing to pay the national minimum wage would increase from £5,000 to £20,000. Many viewed this to be a token gesture, as they believed that the maximum fine would be the limit of what could be imposed on offending employers. However, it has since been clarified that the legislation now in effect will introduce a fine that can be levied on an employer in respect of each underpaid employee.
Business secretary Vince Cable also stated that it will be made easier for offending employers to be ‘named and shamed’.
Whilst the new law will be punitive on employers in breach of the national minimum wage legislation, diligent employers should have no problems being compliant.
It is however, a timely reminder to check that practices and procedures are carefully reviewed to ensure proper use of interns, that employees do not have to work unreasonable additional hours without pay, and that workers are not forced to buy their own company equipment.
If you require more information on minimum wage fines and how to comply with employment legislation please get in touch.
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