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10p tax cut - now this!
Published May 2008
mfg Solicitors is warning that new national minimum pay rates will only compound the problems faced by 21-year-olds hit by the abolition of the 10p tax band.
Sally Morris, head of employment law at mfg Solicitors, said that giving 21-year-olds the same rate as those aged 22 would have a minimal impact on a company’s bottom line but could make a significant difference to the lower paid.
She said that the Low Pay Commission’s report which criticises Government for not doing more to help 21-year-olds in raising national minimum pay rates had brought the issue sharply into focus.
She spoke out following the announcement of increased rates for the National Minimum Wage by The Department for Business, Enterprise and Regulatory Reform (BERR).
Ms Morris, a partner based at mfg’s dedicated Commercial Centre in Halesowen, said the Government had failed to acknowledge the financial strains suffered by 21-year olds, while providing the highest rates for workers over the age of 22.
She said that as a result of the changes young people in the 18 – 21 age brackets were all on the same minimum pay scale of £4.77 per hour.
Ms Morris said: “The Low Pay Commission stresses the continuing disadvantages that this places upon 21-year-olds, many of whom are trying to save for the future and have the full range of adult responsibilities.”
Current concerns over the economy were, in her opinion, correctly viewed by the Commission as contributory factors to the Government’s rejection of extending the adult rate.
Despite recommendations from the Low Pay Commission the increased rates which come into effect on October 1, 2008, remain divided into the existing age categories:
| Aged 22 and over (adult rate): | £5.73 per hour |
| Aged 18 – 21: | £4.77 per hour |
| Aged 16 & 17: | £3.53 per hour |
The Government has disagreed with the Low Pay Commission, suggesting that its research showed that a large proportion of employers already paid at least the adult rate and that any detrimental impact for 21- year-olds was negligible.
Ms Morris added: “There is a balancing act to be considered between improving the pay of one group of workers and the need to maintain a competitive economy.”
