Legal National Minimum Wage and other Nationally Recognised Hourly Wage Rates
Legal National Minimum Wage
• Apprenticeship Wage – 16 – 18 year olds or all ages of apprentices in 1st year – implemented in October each year – rose from £2.73 to £3.30/hr (21% increase) in October 2015
• Legal National Minimum Wage – 16 – 17 year olds – implemented in October each year – rose from £3.79 to £3.87/hr (2% increase) in October 2015
• Legal National Minimum Wage – 17 – 20 year olds – implemented in October each year – rose from £5.13 to £5.30/hr (3.3% increase) in October 2015
• Legal National Minimum Wage – 21 year olds and upwards – implemented in October each year – rose from £6.50 to £6.70/hr (3% increase) in October 2015
In April 2016 there is a new band of National Minimum Wage for 25 year olds and over, which the government is calling ‘The National Living Wage’
The National Living Wage
• Legal ‘National Living Wage’ – 25 year olds and upwards – implemented in April 2016 – in April 2016 £7.20 rising to £9.00/hr by 2020 but with no confirmation of exactly in what increments and when.
The issues the CSSA are pursuing with the appropriate government bodies include:
a. This is out of sync with the annual increase in Legal National Wage which happens on 1st October. What is the government going to do to bring all rates back in sync?
b. The percentage increases in the legal minimum wage are not consistent across the bandings. Is there an explanation for this?
c. It adds a fifth banding of legal minimum pay rate which complicates matters considerably. For those paying the legal minimum wage they will have already increased pay rates on 1st October 2015 and will now have to increase pay rates again by a margin of 7.5% on 1st April 2016 for at least employees who are 25 years of age or over. Simple practicality dictates that all positions irrespective of age will need to be costed at least at the £7.20 per hour rate.
d. Ignoring the Apprenticeship Wage how does all of this balance with age discrimination advice and legislation?
In recent years there has been a movement to create another non-statutory hourly wage rate- This is called The Living Wage Rate: The rate required to be above the poverty level.
The Living Wage
1. London Living Wage – Calculated by the Mayor of London’s Office – increases announced 1st week in November each year (6 months grace to implement increases) – rose from £9.15 to £9.40 per hour in November 2015 (2.8% increase)
2. UK Living Wage – Calculated by Loughborough University – increases announced 1st week in November each year – rose from £7.85 to £8.25 per hour in November 2015 (5.1% increase)
This gives rise to a number of issues the Association is pursuing with appropriate organisations
a. Putting local economics to one side there needs to be some joined up thinking and consistency in percentage increases between London and the UK rates.
b. The government has hijacked the term ‘Living Wage’ with its terminology National Living Wage. Where does this leave the Living Wage movement?
c. There is no notice of what the new Living Wage will be each year and therefore no way of advising clients of what they need to factor into their budgets without guessing.
As contractors who are often bound by fixed price costing over periods of at least one year and often more than one year and in a market which is highly price sensitive:
1. We need to have some chance of predicting likely wage rate inflation.
2. We need to be able to justify our costs clearly to our clients without confusion.
How can The Dept of Work & Pensions and the Dept for Business & Enterprise help us with that? This we are discussing with appropriate Civil Service Departments, and other organisations who issue fixed price contracts, such as FM contractors.