Government reforms (1): October changes

seasonal changes - falling leavesIt’s that time of year when the biannual employment legislation changes take place, and the following come into effect on 1 October 2016:

1. National Minimum Wage (NMW): Increased rates come into effect on 1 October 2016:

  • 25 years and above: the new national living wage (NLW) for workers aged 25 and over came into force at a rate of £7.20 an hour on 1 April 2016. This rate will not change on 1 October;
  • 21-24 year olds: increase from £6.70 to £6.95 an hour;
  • 18-20 year olds: increase from £5.30 to £5.55 an hour;
  • 16-17 year olds: increase from £3.79 to £4.00 an hour; and
  • Apprentice rate:  increase from £3.30 to £3.40 an hour.

This is the last time to expect minimum wage hikes in the autumn. Future changes to the national minimum wage and the national living wage will take place at the same time in April each year, from April 2017. As yet, we do not know what next year’s increases will be although the Government previously expressed an ambition for the NLW to hit £9 by 2020 – which would require annual rises of between 6 and 7%.

As a reminder, it is unlawful for employers to pay workers less than the NMW (or NLW). If an employer doesn’t pay the correct rate, a worker can raise a formal grievance with their employer or complain to HMRC who can send a notice of arrears and impose a penalty.

From April 2016 the maximum penalty increased from 100% of arrears to 200% of arrears (but is halved if paid within 14 days). The overall maximum penalty per worker remains unchanged at £20,000. Business owners who fail to pay can also be banned from being company directors for up to 15 years.

The Government recently named and shamed nearly 200 employers for failing to pay their workers the NMW – to see the list click here.

2. English-language requirement for public-facing workers in the public sector:

The Immigration Act 2016 introduces a requirement that workers in the public sector who are required to speak to members of the public will need to speak English fluently (in Wales they need to speak English or Welsh). The English-language requirement also applies to agency workers where the public-sector body is the hirer.

A draft code of practice to help public authorities comply with the new condition has been published and is available here.

It is anticipated that this requirement will be introduced in October 2016, but this has yet to be confirmed.