The age at which workers become eligible for the full national minimum wage (NMW) rate will drop to 21 this year – a move that will cost employers nearly £50 million.
The Government has published the latest NMW Regulations which state that the age from which the principal rate becomes payable falls from 22 to 21 on 1 October 2010. Employees of that age and above will be entitled to a minimum wage of £5.93 per hour – up 2.2% from £5.80.
In its impact assessment of the changes, the Government admits that the cost to business, charities or voluntary bodies of moving 21-year-olds to the adult rate will be about £48.2 million.
The Department for Business estimates that about 85,000 21-year-olds will be affected by moving them onto the adult NMW rate.
Workers aged between 18 and 20 will see their hourly rate rise from £4.83 to £4.92; and the rate to be paid to workers aged under 18 who have ceased to be of compulsory school age rises from £3.57 to £3.64 per hour.
Apprentices who are either aged under 19, or who are over 19 and in the first year of their apprenticeship, do not currently qualify for the NMW. The new Regulations provide that these apprentices will in future be entitled to a new hourly rate of £2.50.