The new National Minimum Wage (NMW) and National Living Wage (NLW) rates are due to come into effect on 1 April 2017. This is the first time that the NMW and NLW rates will be uprated in parallel. Historically, the NMW increased annually in October and explains the smaller than usual increase in the NMW as the last increases were only effective on 1 October 2016.
The hourly rate of the NMW will increase to £7.05 (a rise of 10p) for adults 21-24-year-olds. The rates for 18-20 year olds increase to £5.60 (a rise of 5p) and the rate for workers above the school leaving age but under 18 will increase to £4.05 (a rise of 5p). The NMW rate for apprentices increases by 10p to £3.50.
The new NMW rates mirror the recommendations made by the Low Pay Commission (LPC) which were accepted in full by the Government. The independent Low Pay Commission (LPC) was established following the National Minimum Wage Act 1998 to advise the government on the NMW. It is made up of representatives from all sides of industry.
The NLW came into effect on 1 April 2016 and has been set at £7.20 per hour. The National Living Wage is the minimum hourly rate that must be paid for those aged 25 or over. From 1 April 2017, the National Living Wage will increase by 30p to £7.50. This represents an increase of 4.2%.
The LPC did consider the uncertain economic prospects as a result of Brexit over both the short-term and long-term however the wage rates have increased in line with their original pre-Brexit intentions. This was done with the caveat that should the economic situation worsen the minimum wage rates may not increase as expected in the future.