National Minimum Wage

Raise National Minimum Wage Rates By Removing the Age Bands

Labour intends to remove the age bands from the National Minimum Wage to create one single hourly rate for all workers. The remaining rate will be the current Adult Worker Rate i.e. for those aged 21 and over. They are also committed to changing the Low Pay Commissions remit to ensure that their annual recommendations for increases to the National Minimum Wage rate(s) take account of the cost of living.

These changes may be implemented relatively quickly because neither change requires primary legislation.

Proposed Changes

Low Pay Commissions

The remit of the Low Pay Commission was changed in July 2024. The LPC was asked to take the cost of living into account when recommending future annual increases to the National Minimum Wage Rate(s).

The government have asked the LPC to make the recommendations for the rates that should apply from April 2025 by October 2024.

The April 2025 increase will therefore be the first increase to take account of the cost of living.

Age Bands

Labour intends to remove the age bands for workers aged 16-17 and 18-20; leaving the 21+ rate as the single hourly rate regardless of age and creating a single minimum rate per hour for all workers.

The age bands could be removed in April 2025, but as this would have a significant effect on businesses who employ younger workers it could be delayed or phased in to give businesses time to prepare.

The most likely scenario is that there will be a significant increase to the 18-20 age rate in April 2025, bringing them closer to the rate for workers aged 21 and over. Then in April 2026 the 18-20 rate will be abolished, making all workers aged 18 an over on the one single hourly rate.

Top Tips

This could have significant impact on employers who have large numbers of workers in the 18-20 age bracket (such as retail, leisure and hospitality sectors). In the short-term audit your workforce to help anticipate how the change to a single hourly rate may impact your business.

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