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New minimum wage rates proposed

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Thursday 08 October 2020

The Committee for Employment & Social Security Is proposing a 20 pence increase in the minimum wage rate from January, taking it from £8.50 to £8.70 per hour. The Young Person's Rate, which applies to 16 and 17 year olds, will increase from £8.05 to £8.25 per hour. The increases are in line with RPIX of 2.4%.

The offset where accommodation is provided by an employer will increase from £82 to £84 per week. And where both accommodation and food are provided, this will increase from £114 to £117. These changes also take effect from 1 January.

The Committee has in recent years been following a plan for minimum wage rates to be increased in equal increments over the course of five years, until the minimum wage rates reached 60% of median earnings by 2023. This was intended to provide both business owners and employees with a direction for business planning. Continuing the formula would have increased the minimum wage rate by 5.9%. But after consideration of the consultation responses from representative groups of employers and employees, the Committee proposes a one year variation from the plan and instead to increase the rates by RPIX. The underlying strategy should remain the same and the Committee intends to return to the 5 year plan when recommending rates for 2022. The target date for reaching 60% of median earnings will be pushed back one year, to 2024.

Deputy Michelle Le Clerc, President of the Committeefor Employment & Social Security, said:

"Covid-19 has had a significant impact on the economy and on the viability of the hospitality and accommodation sectors where wages are generally low. We have listened to the consultation feedback from employers in those sectors. We think it is sensible to increase rates by no more than RPIX for next year, to allow businesses a little more time to recover. At the same time, the Committee believes the minimum wage should at least keep pace with inflation so that the gap between the lowest paid and the middle earners does not widen.

It may seem a bit strange for an outgoing Committee to be publishing these proposals immediately after a General Election. But the current Committee has its full powers until 15 October and we want to get these proposals out in the public domain as early as possible so that employers are aware of the new rates. We expect the new Assembly to debate these proposals at the end of November."

The Employment Relations Service advises employers to make any required changes to their payroll systems to ensure compliance with the new rates, should the States approve the proposals.

For further advice on the Minimum Wage legislation visit www.gov.gg/employmentrelations, contact the Employment Relations Service on 732583, or email employmentrelations@gov.gg.

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