The Government has accepted the Low Pay Commission’s recommendations on increases to the National Minimum Wage (NMW) this year.

The increased hourly rates will come into effect on 1 October 2007 and are as follows:

  • Standard (adult) rate (workers aged 22 and over): £5.52 (from £5.35)
  • Development rate (workers aged between 18 and 21): £4.60 (from £4.45)
  • Young workers rate (workers under 18 and above compulsory school age): £3.40 (from £3.30)

The Government estimates that 1 million workers will benefit from the rise, which is broadly in line with current pay settlements.

In January 2007 the Government published a policy document on the enforcement of the NMW. Penalty notices will generally be issued when an enforcement notice has not been complied with in full by the end of the appeal period (four weeks after service of an enforcement notice). The enforcement notice itself requires payment of arrears within seven days of service of the enforcement notice. The penalty may be applied even if the employer is a first time offender.

The penalty is equal to twice the adult amount in respect of each worker to whom the failure to comply relates. This applies for each calendar day on which the NMW was not paid, starting from the eighth day after the date of service of the enforcement notice and continuing until at least the end of the appeal period (21 days). Therefore, the minimum penalty an employer could face per employee is currently £224.70 (£5.35 x 2 x 21) rising to £231.84 in October 2007.

If an employer believes a penalty notice to be incorrect, they can appeal within four weeks of the date of service of the penalty notice.