The Government has confirmed that NMW rates will rise with effect from 1 October 2014.  This announcement comes following a recommendation to the Government from the Low Pay Commission (LPC).  The LPC was established following the National Minimum Wages Act 1998 to advise the Government on NMW matters and consists of industry representatives across the board.  As a result of the increase more than one million low-paid workers will see their salary rise by up to £355 per year. 

The NMW hourly rates will increase as follows:

  • Adult rate – rising from £6.31 to £6.50 (an increase of 3%)
  • 18-20 year old rate – rising from £5.03 to £5.13 (an increase of 2%)
  • 16-17 year old rate – rising from £3.72 to 3.79 (an increase of 2%)
  • Apprentice rate – rising from £2.68 to £2.73 (an increase of 2%) 

The Government has accepted every recommendation put forward by the LPC including larger increases to NMW rates in the future, provided that the UK economy continues to recover.  The LPC advised the Government that a faster increase to the NMW would be sustainable provided the following three conditions were met:

  1. Sustainable rise in real wages in the UK economy;
  2. Rising or stable employment rates; and
  3. An expectation of sustained economic growth.

The LPC said that it believes that these increases are manageable for employers and will also encourage full-time employment. 

This announcement signifies the first increase to the real value of the minimum wage since 2008. 

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