National Minimum Wage and apprentice rates increase

7 October 2016

The National Minimum Wage rates and apprenticeship rates changed on 1st October 2016. The current rates are as follows:

The National Living Wage, which covers workers 25 and over, is set at £7.20 an hour. This will change in April 2017.

The rate for 21 to 24-year-olds is now £6.95 an hour

The rate for 18 to 20-year-olds has increased to £5.55 an hour

The rate for those aged 16 and 17 has risen to £4.00 an hour

Apprentices now earn £3.40 an hour. This covers apprentices who are under 19, or 19 and over and in the first year of their apprenticeship.

The daily accommodation offset is £6.00. The offset is the one benefit-in-kind that can count towards the minimum wage. This is the maximum daily sum employers who provide accommodation can deduct towards those costs.

The compulsory National Living Wage is set to change each April for all working people aged 25 and over. This will rise to £7.50 in April 2017). Further changes to the National Minimum Wage rates will also apply from April 2017, including: increasing the rate for 21 to 24 year olds from £6.95 to £7.05 per hour; increasing the rate for 18 to 20 year olds from £5.55 to £5.60 per hour; increasing the rate for 16 to 17 year olds from £4.00 to £4.05 per hour; increasing the rate for apprentices from £3.40 to £3.50 per hour.

The Low Pay Commission will recommend any future rises to the rates.

There are a number of people who are not entitled to the NMW/NLW.

Self-employed people.

Volunteers or voluntary workers.

Company directors.

Family members, or people who live in the family home of the employer who undertake household tasks.

All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW.

A series of measures have recently been introduced to crack down on employers that break National Minimum Wage law. As well as being publicly named and shamed, those that fail to pay their workers the National Minimum Wage also face heavy new financial penalties.

With the introduction of the National Living Wage the penalty for non-payment will be 200% of the amount owed, unless the arrears are paid within 14 days.

The maximum fine for non-payment will be £20,000 per worker. However, employers who fail to pay will be banned from being a company director for up to 15 years.

The BWF’s employment, legal and tax guidance is one of the most developed areas of our support for woodworking companies. BWF members needing advice on tax and employment matters can use our free-to-members business support helplines which includes legal assistance from Wedlake Bell, and employment advice from Croner. They can find further resources in this area under publications, where we have a number of guides and template documents.

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