31 January 2014

The countdown begins this month [February] to a decision on whether the national minimum wage should rise this year, with salons bracing themselves for bad news following the call by chancellor George Osborne for above-inflation increases for the next two years.

Although the chancellor does not personally set the NMW, his suggestion that the adult wage should rise to £7 an hour by 2015 from its current £6.31 will be a key discussion point for the Low Pay Commission (LPC) before it makes its recommendations to government, with ministers expected to announce their decision in early March.

In its submission to the LPC the NHBF called for the wage to be left unchanged this year, with members arguing any rise is likely to lead to a freeze in recruitment, increased reluctance to take on Apprentices and vacancies being left unfilled.

The year-on-year rises we have seen throughout the downturn have reduced margins and served to erode wage differentials between senior and junior staff. An above-inflation rise, especially for Apprentices, will simply make a difficult situation even worse,” said NHBF chief executive Hilary Hall.

 The speculation has come as the government has outlined a much tougher regime of penalties for businesses that fail to pay the proper wage.

Previously employers had been required to pay the unpaid wages plus a financial penalty calculated as 50 per cent of the total underpayment, with a maximum penalty of £5,000.

But as of this month the Department for Business, Innovation and Skills is intending to raise the 50 per cent penalty to 100 per cent and the maximum penalty to £20,000. It has also said it wants to bring in legislation “at the earliest opportunity” to make the maximum £20,000 penalty apply to each underpaid worker.

Current hourly minimum wage levels

  • 21 and over:                                                    £6.31
  • 18 to 20:                                                          £5.03
  • Under 18:                                                        £3.72
  • Apprentice (under 19s and for first year):       £2.68