Tynwald approves new approach to Minimum Wage

Commitment to achieve parity with Living Wage ditched, as rate to be based on Median Earnings

Tynwald has approved changes to how the Island's Minimum Wage is calculated and reviewed.

It means any future alterations to the rate of pay will be set as a percentage of Isle of Man Median Earnings and a previous commitment to align the rate with the Living Wage will be dismissed.

Enterprise Minister Tim Johnston says that goal, set in 2021 to be achieved by 2026, 'created challenges in terms of statutory requirements and its alignment with the wider economic climate'.

He described the desire to align the two rates as 'admirable' in intention, but said it "conflates a legal safety net with a 'subjective estimate' of the income required to obtain a good standard of living".

The minister described the recent review as an 'opportunity to reflect on the policy position and the current methodology'.

Mr Johnston says there was engagement with low-paid workers, Tynwald Members, hospitality businesses, the Chamber of Commerce, tourism providers and 'others with a direct interest in the current policy'.

He added that feedback ranged from 'the total abolition of any minimum wage' to an 'increased rate that far outstrips the current calculations of the Living Wage and everything in between'.

It left government with 'two clear options', he said; continue with policy of parity, or base minimum wage on proportion of median earnings.

Minimum Wage on the Island currently stands at £12.25, the Living Wage - the rate which represents the minimum level of pay necessary to allow people the basic opportunities and choices necessary for them to participate in society - is £13.74.

"In October we will announce what will be in effect the 'minimum living wage' coming the following April. That will give certainty to employees and employers." - Treasury Minister Alex Allinson

During the debate in Tynwald there was criticism from a number of members.

Speaker of the House of Keys Juan Watterson chairs the Select Committee on Poverty; the goal of achieving parity with the Living Wage was based on that committee's report.

Mr Watterson had attempted to amend the recommendation that Minimum Wage calculations be based on median earnings to one which read: "based on minimum income standards, which recognises the cost of living on the Island". However, his amendment wasn't supported.

Speaking to Manx Radio, he calls this latest move a 'retrograde step':

Treasury Minister Alex Allinson believes by linking the Minimum Wage with median earnings there will be a 'lot more stability':

The recommendations, as approved and amended:

Recommendation 1: That the process for determining proposals in respect of the Minimum Wage be set as a percentage of Isle of Man Median Earnings.

Recommendation 2: That the percentage calculation be set at 66% of Median Earnings for April 2026 implementation, delivering a Minimum Wage rate directly tied to a commonly recognised Living Wage benchmark.

Recommendation 3: That the Minimum Wage rate is sent to Tynwald for approval in October each year, with an implementation date of the following April. Flexibility to amend this schedule will be retained in legislation.

Recommendation 4: That the Isle of Man retains two distinct age bands, the single hourly rate using the methodology above, and the youth rate which should maintain a differential in ‘absolute’ terms of £2.70 less an hour than the single hourly rate.

Recommendation 5: That the Accommodation Offset remain unchanged for April 2026, with a further review into its uptake, efficacy and impact undertaken, and published by the end of December 2025.

Recommendation 6: That the Department for Enterprise prepare legislation to include recommended changes to Minimum Wage legislation with a target of the 2026-27 legislative session. Including the role and function of the Minimum Wage Committee.

Recommendation 7: That no additional rates or exemptions are to be brought forward at this time.

Recommendation 8: That a review into the impact of the implementation of this policy be conducted and published by the end of December 2026.

In the House of Keys, 16 members voted in favour, eight against. In the Legislative Council, six vote for two voted against.

You can listen to the full interviews with Mr Watterson and Minister Allinson via Newscast below: