Minimum Wage Changes: How Will This Affect Your Business?

20 December 2017 | Nick Jones

Nick Jones, Associate Director in Gregg Latchams’ employment team reports on proposed minimum wage and living wage increases.

The Government recently announced increases in the National Minimum Wage and National Living Wage rates that will apply to all employers from April next year.

These increases represent the largest rise in minimum wage rates for young people in a decade. The largest increases were for the rates for 18-20 year olds (4.7%) and 21-24 year olds (5.4%).

In recent years, the recommended annual increases for younger workers had been lower than for workers aged 25+. This had been justified on the basis that younger workers are perceived to be more at risk of unemployment than workers aged 25+ in the event of an economic downturn.

However, when setting these new rates, it was considered that there was sufficiently strong evidence to justify more ambitious rates for youth rates of pay, including the fact that unemployment has fallen to its lowest rate since 1975, and continues to grow more strongly than forecast. As a result, the Low Pay Commission, who advise the Government on increases in the minimum wage, took account of the importance of ensuring fairness and good employee relations between age groups in the workforce.

The new rates will be:

National Minimum/Living Wage	New Hourly Rate	From When	Old Rate
Age 25+	£7.83	1st April 2018	£7.50
Age 21 – 24	£7.38	1st April 2018	£7.05
Age 18 – 20	£5.90	1st April 2018	£5.60
Age 16 – 17	£4.20	1st April 2018	£4.05
Apprentice rate	£3.70	6th April 2018	£3.50

 

The Government has also announced the new rates for its statutory minimum employment payments that will also apply from April next year:

Entitlement	New Rate	From When	Old Rate
Statutory Maternity Pay	£145.18	1st April 2018	£140.98
Statutory Paternity Pay	£145.18	1st April 2018	£140.98
Statutory Shared Parental Pay	£145.18	1st April 2018	£140.98
Statutory Adoption Pay	£145.18	1st April 2018	£140.98
Statutory Sick Pay	£92.05	6th April 2018	£89.35
Lower Earnings Limit	£116.00	6th April 2018	£113.00

 

Should you have any queries relating to minimum wage, statutory employment rates or any other employment law issue affecting your business, please contact either Nick Jones or Cecily Donoghue in our Employment Team.