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LEGAL UPDATE-National minimum wage increases for October 2008

National minimum wage increases for October 2008  

The Government has announced increases in the national minimum wage which will take effect on 1 October 2008. The Government accepted the Low Pay Commission’s (LPC) recommendations that the adult rate should rise to £5.73 per hour, and the new development and young workers’ rates to £4.77 and £3.53 respectively, but rejected the LPC’s recommendation that 21 year olds should be entitled to the adult NMW rate. 

The LPC submitted its proposals to the Department for Business, Enterprise and Regulatory Reform (DBERR) in February 2008. Although the increases are greater than the rate of inflation, the LPC argued that they are lower than the predicted increase in average earnings, due to the global credit crisis. The DBERR has now formally accepted the following NMW hourly rate increases which will come into force on 1 October 2008: 

  • Standard (adult) rate, for workers aged 22 or over: £5.73 (up from £5.52).
  • Development rate, for workers aged between 18 and 21: £4.77 (up from £4.60).
  • Young workers rate, for workers aged under 18 but above the compulsory school age that are not apprentices: £3.53 (up from £3.40).

The DBERR has also accepted an increase in the accommodation offset, (the cost of accommodation that can count in part towards the employer’s liability to pay the NMW), from £4.30 a day to £4.46 a day, but rejected the LPC’s recommendation that 21 year olds should be entitled to the adult NMW rate.  

 

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