No 68 The National Minimum Wage (Amendment) Regulations 2016
These Regulations come into force on 1/4/16 and effectively they are the vehicle for the introduction of the “National Living Wage” for those workers aged 25 and over.
In simple terms these Regulations set a rate of £7.20 per hour for those workers aged 25 and over from 1/4/16. There is clearly scope for some confusion with other concepts such as the pre-existing National Minimum Wage (statutory and normally changes in October) or the pre-existing living wage (voluntary and weighted differently according to city etc, and normally changes in November).These Regulations also amend the National Minimum Wage rates as follows –
(a) £6.70 for a worker who is aged 21 years or over (but is not yet aged 25 years);
(b) £5.30 for a worker who is aged 18 years or over (but is not yet aged 21 years);
(c) £3.87 for a worker who is aged under 18 years;
(d) £3.30 for a worker to whom the apprenticeship rate applies, as determined in accordance with regulation 5.
These Regulations also amend the percentage figure specified in section 19A(5) of the 1998 Act which is used to calculate the financial penalty imposed for underpayment of the national minimum wage (“the NMW”). The financial penalty is calculated as a percentage of the total underpayment as set out in the notice of underpayment served on the employer by the officer enforcing national minimum wage legislation. These Regulations increase the percentage figure from 100% to 200% of the arrears owed by employers to the employee. The Government has set a clear ambition for the NLW to rise to 60% of average earnings by 2020 – currently expected to be equivalent to around £9 per hour. Future increases in the National Living Wage will be decided following recommendations and advice from the independent Low Pay Commission (LPC). The LPC have been asked to make their recommendations for the NLW in April 2017 by October 2016.