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National Minimum Wage Rates – October 2016 changes

The National Minimum Wage (NMW) rates are changing on 1st October and employers need to make sure the new rates are implemented for all hours worked from that date but there are a number of pitfalls employers should keep in mind...

From 1st October 2016 the National Minimum Wage and National Living Wage rates are as follows:

  • For workers aged 25 and over the rate remains at £7.20 per hour
  • For those aged 21 – 24 the rate will increase to £6.95
  • For those aged 18 – 20, it’s £5.55
  • For 16 – 17 year olds £4.00.
  • And for apprentices (under 19 or in the first year of apprenticeship) the minimum rate is just £3.40

As ever, the minimum rate is one thing, the rate you need to pay to attract decent quality staff could be vastly different and will depend on a number of variables – where you are in the country, the availability of labour (i.e. rate of unemployment) and what competing businesses are paying – keeping an eye on locally advertised vacancies (and the on-line job boards) will help you identify your ‘minimum wage.’

Too many employers focus on the headline cost of wages rather than the invisible costs. The risk here is of losing people for a few pence an hour instead of investing in staff, recognising them as the most important asset of the business. When the costs of recruiting (including the time to do this), knowledge loss, the disruption from inducting new staff, and frankly the risks of an ‘unknown quantity’ are factored in, the wise employer will focus on paying staff enough to remove the incentive to switch employers for a few extra pence an hour. Our top tip for establishing your ‘minimum wage’ is to look to your nearest competitor for the type of staff you employ, and offer pay and conditions that are just a little better.

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