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22 September 2016
Business Growth



If you’ve just got used to the concept of the National Living Wage, introduced in April 2016, and managed to absorb the impact that’s had on your business costs, don’t forget it’s that time of year again when the National Minimum Wage increases are also set to rise. 

This second increase in six months affects the employees in your business from apprentices and workers up to 24 years old.  As October comes back round again, Employers need to start preparing for the next increase in the National Minimum Wage (NMW).  Currently paying £6.70 per hour for the 21 – 24 year olds, the NMW will rise 3.7% to £6.95 per hour from the 1st October 2016 – only 25p per hour less than the National Living Wage.

  Current rate Rate from 1 October 2016
21-24 year olds £6.70 £6.95
18-20 year olds £5.30 £5.55
16-17 year olds £3.87 £4.00
Apprentice rate £3.30 £3.40

This is a double whammy of salary hikes this year, and if you’ve not already budgeted for the next round, I would strongly advise planning and reviewing the impact this will have on your cost base, and taking measures to mitigate those costs to minimize the effect on your bottom line. My previous article The Living Wage Doesn’t have to Cost your Business a Penny gives you some pointers how to preserve your profitability.

This twice yearly increase can be a burden on your payroll administration, but the “good news” is that from 2017 both the National Living Wage and National Minimum Wage increases will both come into effect in April each year, rather than having to make adjustments twice a year.

With all the controversy surrounding the national living wage or minimum wage, and the considerable fines that companies can expect to pay if found to be breaching these legal pay requirements, it’s worth planning well ahead and ensure you’re compliant.  These fines can reach up to the maximum of £20,000 PER WORKER.  However, employers who fail to pay will be banned from being a company director for up to 15 years – so it’s worth getting it right.

Here’s a simple four step checklist to prepare with:

  1. Confirm the correct rate of pay (including the National Living Wage)
  2. Check which staff are eligible for which rates based on their age at the 1st October 2016
  3. Update your payroll before the 1st October 2016
  4. Communicate the pay changes, preferably in writing, to your employees well in advance


Alluxi is here to offer you support through these times of change, bringing a facts and figures approach to evolve your business and realise your goals.

As a first step towards identifying your current business challenges and evaluating where your future opportunities exist within your business, we invite you to complete the in-depth Alluxi Business Success Scorecard delving into the 10 key critical success areas.

Take 15 minutes to respond to the scorecard and get your results within minutes.  You’ll have the opportunity to book a follow-up Productivity to Profit Breakthrough Session to find out how you can implement rapid and measurable improvements.