Minimum wage rises above £5 this October

NATIONAL MINIMUM WAGE

The government has announced that the national minimum wage will rise above £5 for the first time from October 2005.

The adult rate of the minimum wage will increase from £4.85 to £5.05 in October 2005 -- in line with average earnings -- with a further 6% increase to £5.35 in October 2006. The rise is in line with the recommendation of the Low Pay Commission, and takes the minimum wage, in 2006, to almost 50% above its 1999 introduction rate.

The latest increases will extend coverage of the minimum wage to 1.3 million workers in October 2005 and 1.4 million workers in October 2006.

New minimum wage rates

	October 2005	October 2006
Main (adult) rate for workers aged 22 and over	£5.05	£5.35
Development rate for workers aged 18-21 inclusive	£4.25	£4.45

The Government has also:

agreed that the Low Pay Commission should review the 2006 rates, taking into account the latest economic conditions
agreed that the Commission should review the operation of the 16-17 year old rate and report in 2006
announced that it will keep the issue of whether to put 21 year old workers on to the adult rate under review
agreed that the Commission should review the minimum wage treatment of benefits in kind including where those benefits are offered as part of a salary sacrifice arrangement.

Want to know more?

Department of Trade and Industry: You can download details of the announcement of the latest hike in the minimum wage by accessing the DTI web site. Web site: www.dti.gov.uk/er/nmw
Low Pay Commission: The LPC was established as a result of the National Minimum Wage Act 1998 to advise the Government about the national minimum wage.Web site: www.lowpay.gov.uk
Incomes Data Services: Visit the national minimum wage section on the IDS web site for research, analysis and an overview of the legislation. Web site: www.incomesdata.co.uk
TIGER: The government site TIGER (Tailored Guidance on Employment Rights) provides an easy-to-use guide to UK employment law, including minimum wage regulations. Web site: www.tiger.gov.uk

Posted 4 March 2005