The Low Pay Commission was pleased that the coalition Government today accepted the recommendations made in its 2010 report. As well as increases to the three minimum wage rates from October 2010, a new apprentice rate will be introduced at £2.50 an hour. This will be the first time apprentice pay will be covered by the minimum wage framework.
The Commission also welcomed its new remit from the Government, and confirmed it would report by the end of February 2011.
The Chair of the Low Pay Commission, David Norgrove said:
"Our recommendations this year were, as ever, based on sound economic evidence and took account of the prospects for the UK economy. We are pleased that the new Government has accepted our recommendations, including on the introduction of an apprentice minimum wage. We believe the apprentice arrangements will be simple, robust and straightforward to administer and enforce.
"We are also pleased that by giving us a new remit, the Government has shown support for an independent Low Pay Commission. More than ten years on, the Commission's work is still highly valued and respected. Our commitment to an evidence-based approach aims to ensure this will continue".
Notes to Editors
1. The Low Pay Commission submitted its 2010 report to the Labour Government at the end of February 2010, which published and responded to this report in March 2010. The coalition Government had the right to review the recommendations and to publish its own response.
2. The Low Pay Commission is a statutory body whose role is to advise the Government on the National Minimum Wage.
3. The 2010 report is the Commission's eleventh report. All reports are available from the Stationery Office Bookshops or the Commission's website at: http://www.lowpay.gov.uk.
4. The members of the Low Pay Commission are:
David Norgrove (Chair), Chairman of the Pensions Regulator and Trustee of the British Museum; Susan Anderson, Director of Public Services Policy at the CBI; Professor Bob Elliott, Professor of Economics and Director of the Health Economics Research Unit at the University of Aberdeen; Neil Goulden, Chairman of the Gala Coral Group; John Hannett, General Secretary of the Union of Shop, Distributive and Allied Workers; Peter Donaldson, Managing Director of D5 Consultancy Ltd; Professor Stephen Machin, Professor of Economics at University College London and Research Director, Centre for Economic Performance, London School of Economics; Frances O'Grady, TUC Deputy General Secretary and Heather Wakefield, National Secretary for UNISON's Local Government Service Group.
5. A full list of this year's recommendations follows. The Government accepted all of the recommendations except that on funding for enforcement, which was noted.
National Minimum Wage Rates
We recommend that the adult minimum wage rate should increase from £5.80 to £5.93 from October 2010 (para 8.55).
We recommend that the Youth Development Rate should increase from £4.83 to £4.92 and that the 16-17 Year Old Rate should increase from £3.57 to £3.64 from October 2010 (para 8.56).
Accommodation Offset
We recommend that the accommodation offset should increase from £4.51 to £4.61 per day from October 2010 (para 8.58).
Apprentices
We recommend that non-employed apprentices are excluded from the apprentice minimum wage and continue to be exempt from the National Minimum Wage (para 6.19).
We recommend that the apprentice minimum wage be applied as a single rate to those apprentices currently exempt from the National Minimum Wage. That is all those under the age of 19 and those aged 19 and over in the first 12 months of their apprenticeship. The wage should cover both those employed on traditional contracts of apprenticeship and employed apprentices on government-supported Level 2 and 3 schemes (para 6.50).
We recommend that all hours of work and training (relating to both on-the-job and off-the-job) under an apprenticeship should be counted as hours for which the apprentice minimum wage must be paid. All hours should be paid at the same wage rate (para 6.59).
We recommend that the apprentice minimum wage be set at an hourly rate (para 6.65).
We recommend the apprentice wage is set at a rate of £2.50 per hour and is introduced from October 2010 (para 6.88).
We recommend that in England transitional arrangements are put in place so that current apprentices retain a contractual entitlement to a minimum of £95 a week for the remainder of their apprenticeship or until they would become eligible for the National Minimum Wage (para 6.92).
We recommend that the Government includes the review of the apprentice minimum wage rate and arrangements in our annual terms of reference (para 6.96).
Particular Groups of Workers
We recommend that the Government produces, in conjunction with interested parties, sector specific guidance on the National Minimum Wage for the entertainment sector (para 4.50).
We recommend that HMRC investigates whether contract and agency cleaners in the hotel sector are receiving their entitlement under the National Minimum Wage for their hours worked (para 4.88).
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PDF version The national minimum wage has risen to £5.93 an hour from £5.80 and for the first time people aged 21 will benefit from the rate.
Previously the full rate applied to employees aged 22 and older.
There are also corresponding increases for younger workers, with 16 and 17-year-olds seeing a rise from £3.57 an hour to £3.64.
For 18 to 20-year-olds the rate is increasing from £4.83 to £4.92 an hour, the new rules state.
The government has also introduced a minimum wage for apprentices for the first time, of £2.50 an hour, for those under 19 years old.
Warning
However, the British Chambers of Commerce (BCC) has warned the government about further rises that could damage job creation.
It said next year's increase must be no more than 1.7%, as a larger rise would seriously impede retailers' ability to maintain and create jobs.
BCC director-general Stephen Robertson said the government must strike the right balance between higher wages and more jobs.
"Trading conditions are tough, higher costs, such as next April's National Insurance increase will pile on even more pressure," he said.
"Even a small increase in 2011's minimum wage could choke off retailers' vital potential to create new jobs."
The government is also cracking down on employers who flout the minimum wage laws. It said it would name and shame offenders, publicising breaches from 1 January 2011.
Employment Minister Edward Davey said firms had three months to put their house in order.
"Bad publicity can be a powerful weapon in the fight against employers who try to cheat their workers and competitors. Their reputation can be badly damaged if they are seen to be flouting the law," he said.
The national minimum wage was introduced in 1999, at a rate of £3.60 an hour.
Employers who deliberately flout minimum wage laws will be publicly named under a new scheme announced by Employment Relations Minister Edward Davey today.
Cases where employers breach the rules are to be publicised by the Department for Business, Innovation and Skills (BIS) from 1 January 2011 - giving them three months to 'put their house in order'.
The new sanction was announced as the new rates for the National Minimum Wage come into effect. They are:
· £5.93 per hour for low paid workers aged 21 and over, increased from £5.80 and with the adult rate coming into effect at 21 rather than the previous 22;
· £4.92 per hour for 18-20 year olds, increased from £4.83; and
· £3.64 per hour for 16-17 year olds, increased from £3.57.
For the first time there is also an apprentice minimum wage of £2.50 per hour. The new rate applies to those apprentices who are under 19 or those that are aged 19 and over but in the first year of their apprenticeship. All other apprentices are entitled to the standard minimum wage rate for their age group.
Employment Relations Minister Edward Davey said:
“Bad publicity can be a powerful weapon in the fight against employers who try to cheat their workers and their competitors. Their reputation can be badly damaged if they are seen to be flouting the law.
“Responsible employers should also make themselves aware of the new rates that come into effect (1 October). The increases to the National Minimum Wage this year are appropriate for the economic climate. They will strike a balance between helping the lowest paid whilst at the same time not jeopardising their employment.
“The Low Pay Commission estimates that around 970,000 people stand to benefit from these increases. “
The new rates come in as Her Majesty’s Revenue and Customs (HMRC) and BIS publish their National Minimum Wage Annual Report for 2009/10. It reveals HMRC identified over £4.4 million in arrears for over 19,000 workers. The average arrears per worker for the year were £228, which is 18% higher than the previous year (£193 for 2008/9).
Regulations cracking down on rogue operators in the modelling and entertainment sector - banning up-front fees for aspiring models and significantly tightening the conditions attached to them elsewhere -
also come into force today (1 October).
They are part of the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2010. Taken in the round this legislation reduces overall regulatory burdens by eliminating unnecessary suitability checks when workers are placed in permanent posts – except when the work involves vulnerable people.
Notes for editors
1. The Low Pay Commission was established following the National Minimum Wage Act 1998 to advise the Government about the National Minimum Wage. Commissioners have backgrounds in business, trades unions and academic labour relations. For more details, and copies of the full report, see http://www.lowpay.gov.uk/
2. The Low Pay Commission's 2009 report recommended that information should be available on employers who have shown wilful disregard for minimum wage laws.
3. When the minimum wage was launched in 1999, the main rate was £3.60.
4. The accommodation offset will rise from £4.51 per day to £4.61.
5. The Pay and Work Rights helpline number is 0800 917 2368. As well as receiving and investigating complaints about non-payment of the minimum wage, the helpline offers advice and information in more than 100 languages.
6. The National Minimum Wage Annual Report for 2009/10 can be found here: www.bis.gov.uk/nmw
7. The Employment Agency Standards inspectorate is responsible for enforcing the Conduct of Employment Agency and Employment Business Regulations, carrying out inspections and responding to complaints. More information is available at:
http://www.bis.gov.uk/policies/employment-matters/eas
8. The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2010 ban outright the practice of charging up-front fees to would-be models. The absolute ban will not extend to the placement of other entertainers, such as actors, musicians and extras. The risk of abuse is significantly lower in those sectors, and a ban would have a disproportionate effect on perfectly legitimate businesses. However, the amendments will extend the current seven-day cooling off period to 30 days for this group, which will also benefit from increased rights on cancellations and refunds over the period.
9.BIS' online newsroom contains the latest press notices, speeches, as well as video and images for download. It also features an up to date list of BIS press office contacts. See http://www.bis.gov.uk/newsroom for more information.
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The Government has today written to the Low Pay Commission (LPC) setting out the remit for their 2011 Report.
As with previous years the LPC will monitor, evaluate and review the National Minimum Wage (NMW) and its impact, and review the levels of each of the different minimum wage rates.
This year the LPC is also asked to pay particular attention to:
· the competitiveness of small firms; and
· the employment prospects of young people, including those in apprenticeships and internships.
The LPC will report to the Prime Minister and the Secretary of State for Business, Innovation and Skills by the end of February 2011, with their recommendations for October 2011.
The Government has also today announced its response to the recommendations in the LPC’s 2010 report and laid regulations to bring these into force.
The new rates, which will come into effect on 1 October 2010 will be:
· £5.93 per hour for low paid workers aged 21 and over, increased from £5.80;
· £4.92 per hour for 18-20 year olds, increased from £4.83; and
· £3.64 per hour for 16-17 year olds, increased from £3.57.
For the first time there will also be an apprentice minimum wage of £2.50 per hour. The new rate will apply to those apprentices who are under 19 or those that are aged 19 and over but in the first year of their apprenticeship.
Employment Relations Minister Edward Davey said:
“The increases to the National Minimum Wage this year are appropriate for the economic climate. They will strike a balance between helping the lowest paid whilst at the same time not jeopardising their employment.
“The Low Pay Commission estimates that around 970,000 people stand to benefit from these increases.
“Workers on the National Minimum Wage are disproportionately likely to be employed by small firms and so it is right the Low Pay Commission considers their competitiveness when they make their recommendations for next year. SMEs will be vital to our economic recovery”.
Notes for editors
1. The Low Pay Commission was established following the National Minimum Wage Act 1998 to advise the Government about the National Minimum Wage. Commissioners have backgrounds in business, trades unions and academic labour relations. For more details, and copies of the full report, see http://www.lowpay.gov.uk/
2. When the minimum wage was launched in 1999, the main rate was £3.60.
3. The LPC makes recommendations to the Government in its annual report. In addition to the rate increases, the Government has accepted the recommendations that:
4. The Government notes the Commission’s recommendation that there should be a commitment, as a minimum, to maintaining current funding in real terms for monitoring and enforcement of the National Minimum Wage until at least March 2014.
5. The accommodation offset will rise from £4.51 per day to £4.61.
6. The Pay and Work Rights helpline number is 0800 917 2368. As well as receiving and investigating complaints about non-payment of the minimum wage, the helpline offers advice and information in more than 100 languages.
7. The Low Pay Commission estimates that just over 950,000 people stand to benefit from the increase.
8. The remit for the Low Pay Commission’s 2011 report is to:
Monitor, evaluate and review the NMW and its impact, with particular reference to:
Review the labour market position of young people, including those in apprenticeships and internships.
Review the levels of each of the different minimum wage rates and make recommendations for October 2011.
Review the arrangements for the apprentice minimum wage.
Report to the Prime Minister and the Secretary of State for Business, Innovation and Skills by the end of February 2011.
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