legal updates
Thursday, 27 Sep 2007
employers’ costs rise as national minimum wage increases
Although not well publicised, the national minimum wage increased with effect from 1st October 2007. The increases are:
- Workers aged 16-18 rises from £3.30 to £3.40 per hour;
- Workers aged 18-21 rises from £4.45 to £4.60 per hour; and
- Workers aged over 22 rises from £5.35 to £5.52 per hour.
Employers should ensure they comply with the new rates to avoid potential penalties. The typical penalty for underpaying workers is now more than £200 for each worker. Those failing to pay workers at least the national minimum wage also risk the possibility of a criminal record. All employers must therefore ensure that they are adequately paying their staff. Hotel owners should be especially diligent as the Government appears to be homing in on breaches within the hospitality sector in particular.
Before rushing to count the cost, employers should however bear in mind that not everyone who works for them is entitled to be paid the national minimum wage. Those who do not qualify include:
- the genuinely self-employed;
- genuine volunteers;
- apprentices under 19, or over 19 but within the first 12 months of their apprenticeship;
- students doing work as part of their undergraduate or post-graduate course;
- workers on certain training schemes; and
- prisoners.
It should also be remembered that the minimum annual paid holiday entitlement also increased with effect from 1st October. Employees are now entitled to 4.8 weeks off each year. Click here to see our previous update on this issue. If you need any further information or advice on either of these issues, please contact Rosalynd Rennie.