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This article is a short reminder that National Minimum Wage will increase from 1 October 2016, following the Government’s decision to accept recommendations from the Low Pay Commission (LPC) earlier this year.

The main National Minimum Wage rate (for 21- 24 year olds) will rise by 3.7% from £6.70 to £6.95 per hour.

The new October 2016 National Minimum Wage rates

The National Minimum Wage rates will increase from 1 October 2016 as follows:

Current rate Rate from 1 October 2016
21-24 year olds £6.70 £6.95
18-20 year olds £5.30 £5.55
16-17 year olds £3.87 £4.00
Apprentice rate* £3.30 £3.40

*This apprentice rate is for apprentices 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. Employees aged 25 and over are entitled to the National Living Wage which is currently £7.20 per hour.

What you need to do

A four-step checklist for employers following the announcement:

  • Know the correct rate of pay (including the National Living Wage)
  • Find out which staff are eligible which rates
  • Update the company payroll in time for 1 October 2016
  • Communicate the changes to staff as soon as possible

The impact for business

The increase in National Minimum Wage will affect many different sectors. Those sectors that typically employ large numbers of staff working at the National Minimum Wage e.g. retail, SME, hotels, pubs, restaurants and care homes will be particularly affected. The reality is that, along with the recent onset of auto enrolment and the introduction of the National Living Wage, this is yet another financial burden that businesses within the sector will have to deal with.

For more information on absorbing the new costs or outsourcing your payroll please get in touch. If Hawsons manage your payroll for you already, then we will be reviewing the impact of these changes on your business.

Stephen Charles is a tax partner at the firm, specialising in corporate and business taxation. For more details and advice, please contact Stephen on [email protected] or 0114 266 7141.

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