National minimum wage increases to £5.80 per hour

The National Minimum Wage (NMW) increase to £5.80 per hour, starting today, will benefit nearly one million workers, according to the TUC.

Two in three of the 950,000 beneficiaries will be women, reinforcing the NMW’s positive role in narrowing the gender pay gap.

The union body also claims the increase in the minimum wage should benefit the public finances by over £100m, with workers paying £58m more in income tax and national insurance and the government saving £44m on tax credits and in-work benefits.

TUC general secretary Brendan Barber said: “The raise is a modest one but it will put extra cash in the pockets of some of the UK’s most low paid workers. The Low Pay Commission was right to withstand pressure from business to freeze the minimum wage during the recession.”

Today’s 1.2% increase in the NMW (from £5.73 to £5.80) will be the tenth increase since it was introduced in April 1998.

Over the last decade the NMW has increased by 61.1%, compared to a 52.1% growth in average earnings and a 34.9% increase in the Retail Price Index (excluding housing costs) over the same period.

Read more about the NMW from XpertHR, including a detailed overview of changes and future developments. Next year the threshold for the adult rate falls from age 22 to 21.

Also from today (Thursday) it will be illegal for employers to use tips left by customers in cafes, restaurants, hotels and bars to make up the minimum wage for their staff.

Barber said: “This is a real success for unions in sectors where staff rely on tips. They have campaigned hard for some much-needed transparency in a very murky system.

“It’s vital tipping and payment policy are clear to both workers and consumers.”

For an in-depth look at these and other employment law changes starting today read the Personnel Today employment law changes feature.

[Ed: article edited in light of reader comment]

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