The government has accepted the recommendations made by the Independent Low Pay Commission (LPC) in their annual report and has approved of an increase in the National Minimum Wage from 1st October 2014.

The National Minimum Wage rates as recommended by the LPC will be:

• a 19p increase in the adult rate from £6.31 to £6.50 per hour

• a 10p increase in the rate for 18 to 20 year olds from £5.03 to £5.13 per hour

• a 7p increase rate for 16 to 17 year olds

• a 5p increase for apprentices from £2.68 to £2.73 per hour.

Consequently, the payments that must be considered when calculating the minimum wage for an employee include:

• Income tax and National Insurance contributions

• Wage advances or loans

• Repayment of wage advances or loans

• Accommodation provided for the employee above the offset rate

• Penalty charges for a worker’s misconduct

Employers should also note that the new minimum wage rates apply to pay reference periods beginning on or after 1st October 2014. An employee must be paid the minimum wage on average for the time he has worked in the pay reference period.

Contact Solve for more information and advice.