National Minimum Wage Update

Peninsula Team

September 24 2010

As usual, the National Minimum Wage is set for its annual increase next month. Here, we set out the increases to the rates but also point out a couple of other significant changes being introduced this year that you need to be aware of.

With effect from 1st October 2010, the changes are as follows:

• the adult rate (21 year old and above) increases from £5.80 to £5.93;
• the rate for 18 – 20 year olds increases from £4.83 to £4.92;
• the rate for those over compulsory school age but not yet 18 increases from £3.57 to £3.64;
• a rate for apprentices is introduced at £2.50;
• the maximum daily accommodation offset amount increases from £4.51 to £4.61. This rate is applicable where accommodation is provided for each full day during the pay reference period.

It is critical that employers note the Government’s alteration to the age bands that comes into effect alongside this year’s increases. Currently, the adult rate is payable to those workers who are 22 years old or older. This year, the adult rate age band has been extended to include workers who are 21 years old. Therefore, from 1st October 2010, all employers should be paying the adult rate to all of their qualifying 21 year old workers.

Another significant change is the introduction of the apprentice rate. Until now, certain apprentices have qualified for the national minimum wage in accordance with their appropriate age related rate in the same way as other workers. However, apprentices who are under 19, or who are 19 or over but still in the first year of their apprenticeship, have not qualified for a minimum payment under the Regulations. This is about to change and with effect from 1st October 2010, those apprentices who currently do not qualify for the age related minimum rate will be entitled to receive £2.50 for each hour worked. To recap, this new rate will apply to apprentices who are under the age of 19; or who are 19 or over but are still in the first year of apprenticeship. National minimum wage legislation in relation to apprentices who are 19 or over and not in the first year of their apprenticeship has not changed.

The Advice Service is available 24 hours a day to answer any queries you have about these changes, or any other aspect of the National Minimum Wage. Call 0844 892 2772.

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