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Pay Rises and the National Minimum Wage

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New findings have found that whilst increases on average earnings have remained at the same median rate of 2% from last year, there is still a clear discrepancy between pay rises across different industries.

National pay analysis carried out by XpertHR has found a significant variation in salary increases from one industry to the next, and in particular between the public and the private sectors. The figures show that the private sector has awarded average increases of 2%, double the 1% average awarded across the public sector.

Taking a closer look at the private sector it was utility companies that awarded the most generous salary rises, with the electricity, gas, water and transport industries all reporting higher than average pay increases; something which may make uncomfortable reading for those struggling with bills against the rising cost of living.

Employees in the manufacturing sector have also seen pay increases above the national average, with workers in the construction, engineering and metals and general manufacturing industries earning average pay rises of 2.5%. The private sector industries with the lowest average pay increases are in the services sector, with professional and business services and the retail, catering and leisure industries reporting only a 2% increase.

The lowest paid workers will receive a salary boost regardless of industry this October, as a 3% rise in the national minimum wage sees the low pay threshold rise from £6.31 to £6.50 per hour for employees over the age of 21.

The Low Pay Commission, an independent body that advises the Government about the minimum wage and living salaries, has stated that it intends to continue restoring the ‘real value’ of the minimum wage as the economy improves. In turn the Government has claimed the rise to be the first ‘real-terms’ increase since the financial crisis of 2008, and has also introduced much stricter regulations to ensure that the regulations are being met.

Prior to this year HMRC could only fine employers a flat rate of £20,000 for failing to meet the minimum wage; however with the increase this year they can now charge that amount per underpaid employee. HMRC also now has the power to name and shame companies that breach minimum wage requirements, which it has already had to do on several occasions.

At HR Solutions we offer a wide range of HR and employment law expertise, including Payroll Services and a selection of Retained HR Services. Give us a call on 0844 324 5840 or contact us online to find out more.

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