Pay and holidays to rise this autumn
News that the minimum wage is to increase again in October, roughly in line with the rate of inflation, has met with a mixed reaction from the trade.
The national minimum wage for workers over 21 will rise by 17p to £5.52 per hour from October, the Department of Trade and Industry (DTI) has announced.
For 18 to 21-year-olds, the hourly rate will increase by 15p to £4.60, and for 16 and 17-year-olds it will rise by 10p to £3.40. New penalties for employers flouting the rules are also on the way (see box).
The announcement means that the minimum wage will have increased by almost 30% more than inflation since it was introduced in 1999.
Federation of Licensed Victuallers' Associations (FVLA) chief executive Tony Payne said that news of the increase leaves licensees facing a "double whammy" of cost hikes in October, when the minimum holiday entitlement for workers increases from 20 to 24 days a year.
"Once again, small businesses will be hard-hit," Payne said. "We have a lot of pubs closing down because of running costs."
Punch host of Plungington Tavern in Preston, Lancashire, Graham Rowson, said: "The minimum wage rise in itself will not affect me, but linked to increases in everything else, it will. It's another chunk out of net profit."
British Beer and Pub Association (BBPA) director of communications Mark Hastings said: "What is clear is that the Low Pay Commission has listened carefully to businesses - this increase is in line with inflation."
DTI CONSIDERS FIXED PENALTIES FOR LAW-BREAKERS
Licensees and operators who pay less than the minimum wage could be slapped with fixed penalties under new Government plans.
Currently, employers who are found to
pay below the minimum wage can avoid
penalties by back-dating payments to staff and increasing wages. Those who fail to do this risk a criminal record and a £5,000 fine.
But on the advice of the Low Pay
Commission, the DTI is examining the
possibility of a "fixed penalty regime" for employers who flout the law.
A DTI spokesman said that 95% of
businesses found to pay below the minimum wage simply back-date payments, providing little incentive to pay the minimum wage. "Good employers will support enforcement because it undercuts them," he added.
The spokesman also revealed that the crackdown on employers in the leisure sector who pay below the minimum wage, reported previously in the MA (25/1/07), is set to begin in just over a year. The crackdown will target hotels from the start of this financial year.
