Department for Business, Innovation and Skills
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Millions of workers benefit from increased pay and leave entitlements
Millions of British workers will benefit from an increase in the national minimum wage and additional annual leave entitlements, which come into effect on Monday, 1 October.
Minister of State for Employment Relations, Pat McFadden, said the new pay and leave conditions would benefit the most vulnerable members of the workforce, improve working conditions and help boost productivity.
Under the changes:
* The minimum wage will increase from £5.35 to £5.52 an hour for workers aged 22 and over. There will also be increases from £4.45 to £4.60 for 18-21 year olds, and from £3.30 to £3.40 for 16-17 year olds.
* The minimum annual leave entitlement will increase from 20 days to 24 days for full-time workers. A further increase to 28 days will take place on 1 April 2009.
Pat McFadden said:
"These changes will improve the lives of millions of British workers - giving them more time with their families and within their communities, and ensuring that our lowest paid workers continue to be able to earn a living wage.
"Up to six million workers, including 3.5 million women and 2.5 million men, will benefit from the extra annual leave. Businesses will also benefit from a more motivated and productive workforce.
"In addition, more than a million workers will be better off as a result of the minimum wage increases which, when combined with Working Tax credits and other benefits, will provide a guaranteed minimum income of at least £276 a week for families with one child and one full-time worker.
"This will be backed up by a tough new minimum wage enforcement regime announced by the Government earlier this month, including increased maximum fines for employers who flout the laws. Employers who do not pay the correct wages will have to repay arrears to their workers at a higher rate.
"Since 2001 the minimum wage has raised living standards for the worst off, without harming employment."
There are now two common commencement dates for changes to the regulations (April 6 and October 1), which makes it easier for businesses to plan ahead and adapt to the new rules.
Full details of the increases in wage and holiday entitlements are available at http://www.berr.gov.uk
Notes for editors
1. National Minimum Wage (NMW) rates are recommended to Government by the independent Low Pay Commission, which was established following the National Minimum Wage Act 1998. It is made up of representatives from all sides of industry. For more details and copy of the Commission's recommendations visit http://www.lowpay.gov.uk.
2. The Commission is asked to monitor, evaluate and review the impact of the minimum wage with particular reference to the effect on pay, employment and competitiveness in the low paying sectors and small firms; the effect on different groups of workers, including different age groups, ethnic minorities, women and people with disabilities; and the effect on pay structures.
3. The NMW, introduced on April 1, 1999, forms part of the Government's overall strategy to establish fairness in the workplace and ensure that all workers receive at least the minimum hourly rates.
4. BERR is responsible for National Minimum Wage policy. HM Revenue and Customs has operational responsibility for enforcing the minimum wage.
5. BERR estimates that more than one million people will benefit from the increased NMW. However, the figures below are estimates only and are based on 2006 wages data; the figures may change slightly once 2007 wages data becomes available.
Table 1. Number of workers that stand to benefit from the October 2007 National Minimum Wage uprating by age and sex
Male Female Total
16-17 10,000 10,000 20,000
18-21 60,000 50,000 110,000
22 and over 300,000 600,000 900,000
Total 370,000 660,000 1,030,000
Source: DTI estimates based on ONS' Annual Survey of Hours and Earnings (ASHE) 2006
Note: These data are based on 1p pay bands from the ONS ASHE and take account of actual and forecast average earnings growth between the period Spring 2006 and October 2007; uprating from £3.30 to £3.40 for 16-17 year olds, £4.45 to £4.60 for 18- 21 year olds and from £5.35 to £5.52 for those 22 and over
Table 2. Number of workers that stand to benefit from the October 2007 National Minimum Wage uprating by country and government office region
Country or region Beneficiaries Wales 50,000 Scotland 110,000
Northern Ireland 40,000 England 840,000 North-East 60,000
North-West and Merseyside 130,000
Yorkshire & Humberside 100,000 East Midlands 90,000
West Midlands 110,000 Eastern 90,000 London 70,000
South East 100,000 South West 90,000
United Kingdom 1,040,000
Source: BERR estimates based on ONS' Annual Survey of Hours and Earnings (ASHE) 2006
Note: These data are based on 10p pay bands from the ONS ASHE and take account of actual and forecast average earnings growth between the period Spring 2006 and October 2007; uprating from £3.30 to £3.40 for 16-17 year olds, £4.45 to £4.60 for 18- 21 year olds and from £5.35 to £5.52 for those 22 and over
6. The confidential NMW helpline number is 0845 6000 678. The number for Northern Ireland is 0845 6500 207. As well as receiving complaints about non-payment of the minimum wage, the helpline provides advice and information.
7. Employers who fail to pay the NMW face fines and potential criminal prosecution. Prosecutions are conducted by HMRC and the Revenue and Customs Prosecution Office (RCPO). The first successful criminal prosecution occurred in August this year, when the owner of Rascals Day Nursery in Walthamstow was fined £2500 after entering a guilty plea to preventing HMRC officials from accessing staff records. The defendant was also ordered to pay £500 in court costs.
8. The additional 8 days holiday entitlement (pro-rata for part-time workers) has been added to the minimum holiday entitlement to cover the current number of bank and public holidays. This formed part of the Government's 2005 election manifesto and was reiterated in the 'Success at Work' policy statement of March 2006.
9. Workers are currently entitled to 4 weeks paid annual leave under the Working Time Regulations. The new entitlements are not necessarily in addition to bank and public holidays - whether people get time off or extra pay for these days is a matter for their employment contract. However, the change to the regulations ensure that those workers who do not receive time off on bank or public holidays are still entitled to a minimum 4 weeks annual leave.
10. Increasing the holiday entitlement - a further consultation, can be found at http://www.dti.gov.uk/employment/holidays/index.html;
11. Below is a table with the regional breakdown of the number of people that are set to benefit from the additional leave entitlements:
Region Total who stand To benefit
Number of people who % of workers in that
stand to benefit region who will benefit
North East 300,000 13
North West 800,000 21
Yorkshire & Humber 500,000 20
East Midlands 500,000 23
West Midlands 500,000 19
South West 400,000 15
East of England 500,000 17
London 800,000 23
South East 900,000 18
Wales 300,000 20
Scotland 400,000 15
Total 5,900,000 19
2.6 million part-time staff (31% of part-timers) will benefit, and 3.4 million full-time workers (14% of full-timers)
Age groups
16-24: 1 million 25-34: 1.4 million 35-44: 1.6 million
45-49: 0.5 million 50+: 1.5 million
10. Common commencement dates
Common commencement dates are the time when pieces of legislation take effect. They are currently the 6 April and 1 October. Common commencement dates (CCDs) have been introduced to raise awareness for business and stakeholders on changes to regulations. We hope that knowing these dates will help them to plan and budget for the new measures. Go to http://www.businesslink.gov.uk for latest information.
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