The Low Pay Commission (LPC) has been asked to recommend to the Government the level of the UK’s minimum pay rates that will apply from April 2017 – March 2018, including a new rate for the National Living Wage which has only been in existence for a month.

Rationale

There are different rationale for recommending the new rates for the National Living Wage and the National Minimum Wage:

  • National Living Wage – setting rates on a path to 60% of median earnings by 2020 ‘subject to sustained economic growth’.
  • National Minimum Wage categories – recommendations are made on the traditional basis of helping as many low-paid workers as possible without damaging their employment prospects.

The Government has already widely stated that the National Living Wage will reach the level of £9 per hour which gives us an indication of the incremental increases to take place between now and then.

 

April 2017 Projected Rate

It was recently specifically announced that the National Living Wage rate, which applies to workers who are 25 and over, is expected to be approximately £7.60 per hour from April 2017, which will represent an increase of 40p per hour on the current NLW rate.

Also in April, the National Minimum Wage rates will increase. During the lead up to the introduction of the NLW, it was indicated that there would be a constant gap of 50p per hour between the NLW and the highest NMW rate. Under this principle then, if the NLW will increase to £7.60 per hour from April 2017, the projected rate for 21 – 24 year olds is £7.10 (it is currently £6.70 and will increase to £6.95 in October 2017.

The table below shows the current and projected rates (where data exists to allow for projection) of the National Living Wage and the National Minimum Wage

Current Rate
Confirmed Rate from 1st October
Projected Rate from 1st April 2017 (not confirmed)
Age 25+ National Living Wage
£7.20
(£7.20)
£7.60
Age 21 – 24
£6.70
£6.95
£7.10
Age 18 – 20
£5.30
£5.55
Over school age but not yet 18
£3.87
£4
Apprentices*
£3.30
£3.40

 

*Under age 19, or 19 and over and in the first year of apprenticeship. Apprentices not in these brackets are entitled to their age appropriate rate as shown above.