Increases to the National Minimum Wage from 1st October 2015

In the budget this week the government announced that it had accepted the Low Pay Commissions recommendations for increases later this year to the Adult and Youth National Minimum Wage. The increase is the largest real term increase since 2007.

Employers who may be affected by this should be preparing for this change now.

The following rates will come into effect on 1 October 2015:

  • the adult rate will increase by 20p to £6.70 an hour

  • the rate for those aged 18 and 20 years will increase by 3% to £5.30 an hour

  • the rate for those aged between 16 and 17 years will increase by 2% to £3.87 an hour

  • The apprentice rate will increase by 57p to £3.30 an hour.

  • The accommodation offset increases from the current £5.08 to £5.35

The Low Pay Commission recommended that the apprentice rate be increased by 7 pence an hour but the government took the decision to raise the apprentice rate more substantially. This rate applies to apprentices aged 16-18 and those aged 19 years and older in their first year after which they should be paid the national minimum wage applicable for their age.

Although the minimum wage is an hourly rate it applies to all eligible employees and this includes not only hourly paid but those with annual salaries contracted to a set number of hours a week and anyone paid by piece work or any other meeasure of work.

The government sees work experience as a valuable way of helping young people into work but employers should be aware of the clear distinction made between work experience as part of an educational or pre employment work program which is exempt from the National MinimumWage regulations and employment where someone is a worker and therefore should be paid according to the regulations. Workers must be over the school leaving age (defined as 16 before the end of August) to be entitled to the minimum wage and should be paid irrespective of the numbers of hours worked and whether the contract is permanent, casual or through an agency.

People working as volunteers or in a voluntary capacity are not entitled to the minimum wage nor are young people below the official school leaving age. Those in higher education who are on year work placements of up to 12 months are also excluded, as are those people on government pre apprenticeship schemes or 6 week Job Centre Plus work trials.