National Minimum Wage changes – 1st October 2012

On 1st October 2012, the annual National Minimum wage increases take effect.

Adult workers aged 21 and over will now be entitled to £6.19 an hour, an increase of 11p an hour from the previous rate of £6.08 per hour. There are also increases in the minimum wage payable to apprentices, which will increase for £2.60 to £2.65 per hour, and an increase in the accommodation offset i.e. the amount which an employer is permitted to deduct from minimum wage for certain accommodation costs without breaching the legislation. There is no change to the youth rate of £4.98 payable to workers aged 16 to 20.

The increases will have an impact on recruiters operating a PAYE arrangement, and umbrella companies. The 11p increase may seem small, but across a large recruitment business or umbrella the effect could be significant.

Whether the increased costs are absorbed or passed on to hirers will depend upon both the contractual arrangement that are in place with the hirer, and the negotiating position of the recruitment companies. A failure to comply with the national minimum wage  can result in prosecution and fines as well as the repayment of any underpaid amounts to the worker and a requirement to account to HMRC should any tax or national insurance be due on such amounts.

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