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New rates for the National Minimum Wage come into force

Changes to the National Minimum Wage (NMW) announced six months ago came into force on 1 October.

The main rate for workers aged 21 and over has risen by 11 pence to £6.19 per hour. This is an increase of 1.8 per cent on last year's rate, which stood at £6.08.

The NMW rate for apprentices has also risen, increasing by 1.9 per cent to £2.65 per hour. The previous rate was £2.60.

There was no change in the NMW for younger workers. The rates have been frozen at £4.98 per hour for workers aged 18 to 20 and at £3.68 for those aged 16 or 17.

The Department for Business, Innovation & Skills (BIS) explained the freeze by warning that any increase in the NMW may make employers more reluctant to hire younger workers.

The increases to the main and apprentice rates are below inflation, which currently stands at 2.5 per cent. When the new rates were set back in March, they were broadly in line with pay rises of 1.7 per cent posted on the VocaLink FTSE 350 Take Home Pay Index. But pay now appears to be keeping better pace with inflation. Figures just released by the Incomes Data Services (IDS) show that pay settlements are holding at around 2.5 per cent. There are some substantial variations between sectors, however, with pay freezes being concentrated in the public sector, not-for-profit organisations and the construction industry.

Most UK workers over school leaving age are legally entitled to be paid at least the NMW. Those eligible include agency workers, casual workers, part-time workers, pieceworkers, homeworkers and anyone working on commission. Those not entitled include the self-employed, volunteers, students on work experience, people on certain training schemes, some company directors, workers living in an employer's household, residents of certain religious communities, prisoners, the armed forces and share fishermen.

Employers can be 'named and shamed', and face criminal prosecutions and unlimited fines for failing to pay at least the NMW to eligible workers.

Acas can help organisations find practical solutions to issues related to pay and reward. Visit Pay and reward: how Acas can help and the Acas Training and Business Solutions area for more information.

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