The Low Pay Commission recommends the abolition of sub-minimum youth rates of the National Minimum Wage.

The Low Pay Commission (“the LPC”) has published their report on sub-minimum youth rates of the National Minimum Wage (“NMW”). The report was published on 11 June 2024 and recommended the abolition of all sub-minimum rates for all employees.

Currently, employees aged 20 years and over are entitled to receive 100% of the NMW, employees aged 19 years are entitled to receive 90% of the NMW, employees aged 18 years are entitled to received 80% of the NMW, and employees under 18 years of age are entitled to receive 70% of the NMW.

In June 2023 the LPC invited stakeholders to make written submissions on the matter and Ibec participated in this consultation process. Following the publication of the report by the LPC, the recommendations made by the LPC include:

• that sub-minimum wage rates for employees who are 18 and 19 years of age should be abolished no sooner than 1 January 2025; and
• that sub-minimum wage rates for employees who have not attained the age of 18 years should be abolished no sooner than 1 January 2025.

The LPC recommends that if youth rates are abolished, after these rates have been abolished for two years, that a study be conducted to evaluate if there were adverse consequences from removing sub-minimum rates, in particular for those aged under 18. Should a significant adverse outcome be identified, the study should review the full range of policy options available to Government. This study should be submitted to Government and be given due consideration, with the resulting Government decision notified to LPC. A subsequent follow up study should be commissioned after youth rates have been abolished for four or more years using the longer data series then available.

The LPC noted that they were unable to identify an objective justification for retaining the subminimum rates which in their view, merited their abolition, given Article 6 of the Adequate Minimum Wage Directive which states that, “Where Member States allow for different rates of statutory minimum wage for specific groups of workers or for deductions that reduce the remuneration paid to a level below that of the relevant statutory minimum wage, they shall ensure that those variations and deductions respect the principles of non-discrimination and proportionality, the latter including the pursuit of a legitimate aim.”

The LPC therefore concluded they could not support the retention of said rates under European law. In terms of the impact on employers, the LPC report states that “conscious of the potential for adverse consequences from removing subminimum youth rates for a small number of employers in specific sectors, the Low Pay Commission, similar to its recommendation in its Living Wage Report (2022), recommends that consideration is given to how employers with a substantial proportion of young workers in receipt of sub-minimum wages can be supported during and after the period in which youth rates are abolished, if they are abolished.”

A link to the report published by the Low Pay Commission can be found here.