This week we focus on recent developments in the area of the National Minimum Wage, including new rates recently published which take effect from October 2014.
New penalties announced
We reported previously on new government plans to increase the penalties for employers who do not comply with National Minimum Wage (NMW) rules. From 7th March 2014, new Regulations came into force which amends the figures used to calculate financial penalties imposed for underpayments of NMW. The financial penalty is calculated as a percentage of the total underpayment. The new Regulations increase the percentage figure from 50 per cent to 100 per cent and increase the figure for the maximum financial penalty from £5,000 to £20,000.
New rates from October announced
From 1 October 2014 there will be:
- a 19p, or 3 per cent increase, in the adult rate (from £6.31 to £6.50 per hour)
- a 10p, or 2 per cent increase, in the rate for 18-20 year olds (from £5.03 to £5.13 per hour)
- a 7p, or 2 per cent increase, in the rate for 16-17 year olds (from £3.72 to £3.79 per hour), and
- a 5p, or 2 per cent increase, in the rate for apprentices (from £2.68 to £2.73 per hour).
The increases follow recommendations from the Low Pay Commission (LPC) which have been accepted by the government. The LPC considers that 2014 will mark the start of a 'new phase' of 'bigger increases than in recent years'. The Business Secretary, Vince Cable, has accepted the plan for bigger increases in the NMW in future, provided that economic conditions continue to improve.
Changes for young workers
There have also been changes announced to NMW rules for young workers engaged in a traineeship in England. New Regulations make it explicit that any work done as part of a traineeship does not qualify for the NMW. "Traineeships" are skills programmes which last a maximum of six months, and are aimed at young people aged between 16 and 23 without the skills or work experience needed to get a sustainable job. The age group for traineeships will be extended to include 24-year-olds from 2014/15.
Employers are reminded of their obligations under the National Minimum Wage Regulations and to avoid these new harsher penalties are advised to audit pay to ensure these minimum hourly rate levels are being adhered to.
And finally... the new ACAS Early conciliation form can be found on ACAS' website here.
As we reported last week, this new ACAS Early Conciliation scheme is available now but not compulsory until 6th May 2014.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.