National Living and Minimum Wage increases

The Chancellor announced in his autumn statement that the National Living Wage (NLW) payable from age 25 is to increase from £7.20 an hour to £7.50 an hour with effect from the first pay period on or after 1 April 2017. Following on from this announcement the government has now published full details of the National Minimum Wage rates that will come into effect next April.

The National Minimum Wage for:

• 21-24 year olds will increase to £7.05 an hour (from £6.95)
• 18-20 year olds will increase to £5.60 an hour (from £5.55)
• 16-17 year olds will increase to £4.05 an hour (from £4.00)
• Apprentices under age 19 (or age 19 and over but in the first year of an apprenticeship) will increase to £3.50 an hour (from £3.40)

The accommodation offset will increase to £6.40 a day for each day when accommodation is provided during the pay period (from £6.00).

Although these increases may seem small (apart from the 4% increase in the NLW), it must be remembered that all rates except the NLW were increased only last month, so for these rates the increase is effectively an adjustment to move the anniversary for annual increases from October to April each year.

Commenting on the increases, David Hewitt, Head of Employment Law Information at Citation, said:

“The increase in the NLW is lower than anticipated, and although the other increases might not be popular with employers, at least it should see an end to increases until April 2018, and one date for increases must be preferable to the current position where the NLW anniversary is in April and the remainder are in October.

“However, the 30p increase in the NLW from April next year will put pressure on increases in future years.  The government’s target is for a national living wage of “at least” £9.00 an hour by 2020, which means it will need to increase by an average of 50p an hour each year through to 2020 to achieve this target.”