UK National Minimum Wage Guide for Employers 2026

The UK National Minimum Wage (NMW) framework sets the legal minimum that most workers must be paid, with rates varying by age and apprentice status. Together with the National Living Wage (NLW), it creates a statutory pay floor that employers cannot lawfully undercut.

As an employer, you are under a legal duty to pay at least the relevant National Minimum Wage or National Living Wage rate to eligible workers. Failure to do so can trigger arrears, financial penalties, public naming by HMRC and serious damage to workforce trust and reputation.

This guide explains what the UK National Minimum Wage is, how it interacts with the National Living Wage, which workers are covered, the rates in force for 2024 and from April 2025, how to calculate compliance, and practical steps employers can take to reduce the risk of underpayment.

Section A: What Is the UK National Minimum Wage?

The National Minimum Wage regime is a core pillar of UK employment protection. It sets legally enforceable minimum hourly pay levels for most workers above school-leaving age, with different bands depending on age and apprentice status. The highest of these statutory rates is known as the National Living Wage.

The minimum wage rules apply across almost all sectors and to most working arrangements. Employers must ensure that every qualifying worker receives at least the correct National Minimum Wage or National Living Wage rate for each relevant pay reference period, regardless of whether they work full-time, part-time, on zero-hours, or under other contractual arrangements.

1. National Minimum Wage (NMW) and National Living Wage (NLW)

Under the statutory framework, there are several different minimum wage bands. In broad terms:

• The National Living Wage (NLW) is the highest rate and applies to most workers aged 21 and over.
• The National Minimum Wage (NMW) applies at lower rates to younger workers (16–17 and 18–20) and to eligible apprentices.

Although the term “National Minimum Wage” is often used in a broad, generic sense, it is helpful for employers to think of a single UK minimum wage framework made up of several age- and status-based bands, with the National Living Wage sitting at the top of that structure.

Paying the wrong rate – for example, applying a youth rate when the worker qualifies for the National Living Wage – can result in underpayment, arrears and HMRC enforcement action.

2. Legal Status and Enforcement

The National Minimum Wage and National Living Wage are not voluntary benchmarks but statutory entitlements. The relevant rates are set in secondary legislation, and HMRC is responsible for enforcing compliance. Workers can also bring claims in the employment tribunal if they are not paid correctly.

Because the National Minimum Wage regime provides a mandatory floor for pay, employers cannot contract out of it or agree a lower rate, even with the worker’s consent. Any contractual term that purports to pay below the appropriate minimum wage rate will be overridden by statute.

3. Why the National Minimum Wage Matters to Employers

For employers, the UK National Minimum Wage framework is central to pay, budgeting and HR strategy. Getting minimum wage calculations wrong can lead to:

• Arrears of pay owed to affected workers.
• Penalty notices and fines issued by HMRC.
• Inclusion on the government’s public “naming and shaming” lists.
• Grievances, disputes and claims in the employment tribunal.
• Reputational damage with staff, customers and stakeholders.

Against that backdrop, employers should treat National Minimum Wage compliance as a critical element of their broader compliance and risk-management framework.

Section B: 2024 and 2025 UK National Minimum Wage and National Living Wage Rates

The UK government reviews minimum wage rates annually, usually following recommendations from the independent Low Pay Commission. New rates typically take effect in April each year. Employers must ensure that payroll systems and budgets are updated in line with these changes to avoid accidental underpayment.

This section summarises the National Minimum Wage and National Living Wage rates applicable from 1 April 2024 and the confirmed uplifts from 1 April 2025.

1. 2024 UK National Minimum Wage and National Living Wage Rates

The following statutory minimum wage rates apply from 1 April 2024:

*The apprentice rate applies to apprentices under 19, and to apprentices aged 19 or over who are in the first year of their apprenticeship. Once an apprentice aged 19 or over has completed the first year, they become entitled to the age-appropriate National Minimum Wage or National Living Wage rate.

The National Minimum Wage and National Living Wage rates are normally updated annually, with any increases taking effect in April. Employers must apply the new rates from the implementation date; failing to do so may lead to arrears and enforcement action.

2. UK National Minimum Wage and National Living Wage Rates from April 2025

The government has confirmed that it has accepted the Low Pay Commission’s recommendations for rate increases from 1 April 2025. The following National Minimum Wage and National Living Wage rates will apply:

From April 2025, the National Living Wage for workers aged 21 and over will rise to £12.21 per hour. The youth and apprentice National Minimum Wage rates will increase by a higher percentage, reflecting an ongoing policy focus on raising pay for younger workers and apprentices.

The accommodation offset – the maximum amount per day that employers can count towards National Minimum Wage pay where they provide accommodation – will also rise. Employers that provide accommodation and rely on the offset in their pay calculations must ensure they are using the correct updated amount.

3. Preparing for National Minimum Wage Rate Changes

In advance of each April rate change, employers should:

• Identify all workers whose pay will be at or near the new National Minimum Wage or National Living Wage rates.
• Update payroll software and pay scales to reflect the new statutory minimums.
• Review the impact on pay differentials and wider reward structures.
• Inform HR, payroll and line managers of the new rates and effective date.

Proactive preparation reduces the risk of inadvertent non-compliance as National Minimum Wage and National Living Wage rates increase.

Section C: Which Workers Are Eligible for the UK National Minimum Wage?

The National Minimum Wage and National Living Wage rules cover most workers in the UK labour market, but there are specific categories that are excluded from entitlement. Employers must be clear about who qualifies as a “worker” for minimum wage purposes and which categories fall outside the regime.

In practice, employers should start from the assumption that most individuals performing work personally for the organisation – including employees and many limb (b) workers – will be entitled to at least the relevant National Minimum Wage or National Living Wage rate.

1. Types of Workers Entitled to the National Minimum Wage

The following broad categories will usually be entitled to at least the applicable National Minimum Wage or National Living Wage rate:

• Full-time workers – Workers engaged on full-time contracts, regardless of job title or seniority, are generally entitled to at least the statutory minimum for their age and status.
• Part-time workers – Part-time workers are equally entitled to receive at least the National Minimum Wage or National Living Wage on a pro-rata basis. The hourly rate must not fall below the applicable minimum simply because fewer hours are worked.
• Temporary and seasonal staff – Workers engaged on fixed-term, casual, or seasonal contracts (for example, additional staff during busy retail periods) must be paid at least the relevant National Minimum Wage or National Living Wage rate for the hours they work.
• Agency workers – Agency workers supplied through staffing businesses will usually qualify for minimum wage protection and must be paid at least the correct rate for their age and status.
• Apprentices – Apprentices are covered by the minimum wage regime but have a dedicated apprentice rate for certain periods, as explained below.

Where there is any uncertainty about status, employers should take advice and avoid assuming that individuals fall outside the National Minimum Wage or National Living Wage framework.

2. National Minimum Wage Rules for Apprentices

National Minimum Wage rules make specific provision for apprentices. Broadly:

• Apprentices under 19 are entitled to at least the apprentice National Minimum Wage rate.
• Apprentices aged 19 or over are entitled to the apprentice rate during the first year of their apprenticeship.
• Once an apprentice aged 19 or over has completed their first year, they must be paid at least the age-appropriate National Minimum Wage or National Living Wage rate.

For example, a 21-year-old apprentice in the first year of their apprenticeship can lawfully be paid at the apprentice rate. Once they move into the second year, they must receive at least the National Living Wage rate for workers aged 21 and over.

The following table illustrates how an apprentice’s minimum entitlement progresses:

Employers should monitor apprentices’ ages and progression through their apprenticeship programmes so that pay is uplifted at the appropriate milestones.

3. Workers Not Entitled to the UK National Minimum Wage

There are limited categories of individuals who are not entitled to the National Minimum Wage or National Living Wage. Key examples include:

• Genuine volunteers – Individuals who volunteer for charities, voluntary organisations, associated fundraising bodies or statutory bodies, and who receive only genuine out-of-pocket expenses, are not normally entitled to the minimum wage because they are not “workers” in law.
• Certain family members – In narrow circumstances, family members who live in the employer’s family home and share in the family’s household tasks and activities may fall outside the National Minimum Wage rules. This does not generally extend to relatives working in a family business on standard terms, especially where they live elsewhere.
• Some interns and work-shadowing arrangements – Where an intern is genuinely observing only and is not required to carry out work, or where they are undertaking a placement as a compulsory part of a higher or further education course, they may not qualify for the National Minimum Wage. However, many interns who perform productive work under obligation will be entitled to minimum wage protection.
• Members of the armed forces – Regular armed forces personnel are excluded from National Minimum Wage coverage.
• Prisoners – Prisoners undertaking work while in custody are not generally covered by the minimum wage regime.
• Certain other statutory exceptions – A small number of additional categories are carved out in legislation or regulations.

Because the scope of the National Minimum Wage is wide, employers should be cautious about assuming that individuals fall outside the regime. Where in doubt, it is safer to treat an individual as entitled to at least the applicable minimum wage rate unless clear statutory exemption applies.

Section D: How to Calculate Compliance with the UK National Minimum Wage

Employers must calculate pay correctly to ensure that workers receive at least the appropriate National Minimum Wage or National Living Wage rate for each relevant pay reference period. Errors can arise not only from hourly rates that are too low, but also from failing to count all working time or from making deductions that effectively reduce pay below the statutory minimum.

National Minimum Wage compliance is assessed over the worker’s pay reference period, which is usually the period for which they are paid (for example, weekly or monthly) and cannot exceed one month.

1. Calculating the Minimum Wage for Different Workers

To check compliance, employers should:

• Identify the correct National Minimum Wage or National Living Wage rate for the worker’s age and status (including apprentice status where relevant).
• Determine the worker’s pay reference period (e.g. weekly, fortnightly or monthly, up to a maximum of one month).
• Calculate the total pay that counts towards the minimum wage for that reference period.
• Calculate the total hours worked in that period that count as working time for minimum wage purposes.
• Divide the total qualifying pay by the total qualifying hours to obtain the average hourly rate.

If that average hourly rate is at least the correct National Minimum Wage or National Living Wage rate, the employer will usually be compliant for that period. If it falls below, the employer will be in breach.

For salaried workers, the same principle applies. Employers must look at each pay reference period in turn – not at annual averages – to confirm that the pay for that period, divided by the hours worked, meets or exceeds the relevant minimum wage rate.

2. Working Time for National Minimum Wage Purposes

National Minimum Wage rules contain detailed provisions on what counts as working time. This can include, for example:

• Time spent actually performing duties.
• Certain time spent on training required by the employer.
• Some travel time during the working day (for example, travelling between client sites).

Depending on the type of work, some waiting time, on-call time and sleep-in shifts may count as working time for minimum wage purposes. Employers must apply the correct rules for each category of worker to avoid understating the hours worked.

3. Deductions and Their Impact on National Minimum Wage Compliance

Certain deductions or payments made by workers can reduce the pay that counts towards the National Minimum Wage. Employers must check that, after taking account of such deductions, the worker still receives at least the appropriate minimum wage rate for the pay reference period.

Examples include deductions or payments for job-related items such as uniforms, tools and certain travel costs. If these are borne by the worker, they will often reduce pay for minimum wage purposes and may cause underpayment unless the employer adjusts pay accordingly.

The following table illustrates the potential impact of common deductions on National Minimum Wage compliance:

By contrast, some deductions or voluntary payments will not affect National Minimum Wage calculations. However, because the rules are technical and fact-specific, employers should treat any job-related cost borne by the worker as a potential risk area and review it carefully.

To illustrate the basic principle, if a worker is paid £9.50 per hour for 40 hours in a weekly pay reference period, their gross pay is £380. If the applicable National Minimum Wage rate is £9.50, this appears compliant. However, if the worker is required to pay £20 from their wages for a compulsory uniform and the deduction counts for NMW purposes, their pay for minimum wage calculations may drop below the correct level unless the employer adjusts the rate or reimburses the cost.

Section E: Penalties for Non-Compliance with UK National Minimum Wage Laws

Paying less than the applicable National Minimum Wage or National Living Wage rate exposes employers to significant legal, financial and reputational risk. HMRC has wide enforcement powers and actively investigates suspected underpayments across sectors.

This section summarises the key sanctions that can apply where minimum wage breaches are identified.

1. HMRC’s Enforcement Powers

HMRC is responsible for enforcing the National Minimum Wage and National Living Wage. It can carry out investigations, require the production of records, interview staff and issue formal notices where underpayments are found.

If HMRC concludes that a worker has been paid below the National Minimum Wage or National Living Wage, it can require the employer to:

• Pay arrears to affected workers, usually calculated using current rates (which can increase the overall amount owed).
• Pay a financial penalty of up to 200% of the underpayment, subject to a cap per worker.

In serious or deliberate cases, HMRC may also refer matters for criminal investigation. While criminal prosecutions are relatively rare, they remain a possibility for the most serious forms of non-compliance.

2. Types of Penalties for National Minimum Wage Breaches

The key sanctions for National Minimum Wage and National Living Wage breaches can be summarised as follows:

Even where breaches are inadvertent, HMRC can still require arrears and impose penalties. The fact that a breach was accidental is not, by itself, a defence to enforcement action.

3. Wider Consequences of Non-Compliance

Beyond financial penalties and arrears, failing to comply with the UK National Minimum Wage regime can have broader consequences:

• Damage to employer brand and difficulty attracting or retaining talent.
• Increased union scrutiny or collective disputes.
• Greater regulatory oversight in other areas, such as tax or employment status.
• Loss of trust between management and the workforce.

Against this backdrop, investment in effective National Minimum Wage and National Living Wage compliance is often far less costly than dealing with the aftermath of underpayment.

Section F: UK National Minimum Wage Best Practices for Employers

Robust systems and processes can significantly reduce the risk of National Minimum Wage or National Living Wage underpayments. Rather than reacting to issues after they arise, employers should adopt proactive best practices around payroll, contracts, training and record-keeping.

This section outlines practical steps that employers can take to support ongoing compliance.

1. Regular Payroll Audits

Regular payroll audits are one of the most effective tools for preventing and identifying National Minimum Wage issues. An audit might include:

• Checking that each worker is on at least the correct statutory rate for their age and status.
• Reviewing whether all working time is being captured correctly.
• Assessing whether any deductions or staff-borne costs risk reducing pay below the minimum.
• Verifying that pay reference periods are being applied correctly.

Many employers carry out payroll checks on a quarterly or bi-annual basis, and more frequently where there are known higher-risk working patterns (such as unpaid travel time, uniforms or on-call work).

2. Using Payroll Software Effectively

Modern payroll software can greatly assist with National Minimum Wage compliance. Systems that are kept up to date with current National Minimum Wage and National Living Wage rates can automatically flag where hourly pay risks dropping below statutory minimums.

Employers should ensure that:

• Software is promptly updated whenever new National Minimum Wage or National Living Wage rates are announced.
• Data on workers’ ages, apprentice status and contracted hours is accurate.
• Reports and alerts are regularly reviewed by HR and payroll teams.

Automating routine checks does not remove the need for human oversight, but it can significantly reduce the risk of basic errors or missed rate changes.

3. Training HR, Payroll and Line Managers

Human error is a common factor in National Minimum Wage breaches. Regular training helps HR, payroll and line managers understand:

• Current National Minimum Wage and National Living Wage rates, including upcoming changes.
• Which categories of workers are entitled to minimum wage protection.
• How working time and deductions affect compliance.
• When to escalate potential issues for specialist advice.

Training is particularly important where the organisation uses complex working patterns (for example, irregular hours, sleep-in shifts or travel between sites) or where line managers have discretion over authorising deductions, uniforms or equipment purchases.

4. Clear Employment Contracts and Documentation

Employment contracts and written particulars should clearly set out:

• The worker’s pay rate (hourly rate or salary) and pay reference period.
• Any expected hours of work or patterns of working time.
• Arrangements for overtime, bonuses and other variable elements of pay.
• Any deductions or charges that may be applied and the circumstances in which they arise.

Whenever National Minimum Wage or National Living Wage rates increase, employers should review template contracts and, where appropriate, issue updated documentation or letters to affected workers confirming new rates.

5. Governance and Accountability

Good governance structures can ensure that National Minimum Wage compliance is not treated as purely a payroll issue. Employers may wish to:

• Assign clear responsibility for minimum wage compliance at senior level.
• Include National Minimum Wage and National Living Wage checks within internal audit programmes.
• Monitor public enforcement trends and government “naming and shaming” lists to understand where others have gone wrong.

Embedding National Minimum Wage compliance within broader risk and governance frameworks helps ensure it remains a standing priority rather than a one-off project.

Section G: Business Impact of the UK National Minimum Wage

The National Minimum Wage and National Living Wage shape how employers plan their finances, structure their workforce and design their long-term business strategies. While the regime provides essential protection for workers, it also has important cost and competitiveness implications for employers.

1. Financial Implications of Rising Minimum Wage Rates

When National Minimum Wage and National Living Wage rates increase, employers face higher wage costs, particularly in sectors that rely heavily on lower-paid workers such as retail, hospitality, social care and cleaning.

Key financial impacts include:

• Higher overall payroll spend as rates are uplifted to meet statutory minimums.
• Potential “ripple effects” where employers raise wages for staff earning just above the minimum to maintain pay differentials.
• Pressure on profit margins, especially for small and medium-sized enterprises with limited flexibility to absorb increases.

Employers may respond by reviewing pricing, improving productivity, adjusting staffing models or investing in technology to offset higher wage bills.

2. Effects on Hiring and Workforce Strategy

National Minimum Wage and National Living Wage levels influence hiring decisions and workforce planning. As minimum pay rates rise, some employers may:

• Become more selective in recruitment, focusing on candidates who can demonstrate higher productivity or broader skill sets.
• Review the balance between permanent staff, temporary workers and apprentices.
• Offer broader non-pay benefits (such as flexible working, development opportunities and wellbeing support) to attract and retain staff without relying solely on higher wages.

In some sectors, rising minimum wage levels may accelerate investment in automation or technology, for example through self-service checkouts, digital ordering or more efficient scheduling systems.

3. Long-Term Strategic Considerations

Over the longer term, the National Minimum Wage framework can act as a catalyst for wider changes in business models. Employers may:

• Redesign roles to enhance productivity and justify higher wage levels.
• Invest more heavily in training and upskilling to move workers into higher-value roles.
• Re-evaluate where operations are based or how services are delivered to balance cost and quality.

While minimum wage increases can be challenging, employers that plan ahead, focus on productivity and integrate National Minimum Wage considerations into broader strategy are better placed to maintain both compliance and competitiveness.

Section H: Summary of Key UK National Minimum Wage Points

The UK National Minimum Wage regime sets legally enforceable minimum pay levels for most workers, with the National Living Wage as the highest rate for those aged 21 and over. Below that, specific National Minimum Wage bands apply to younger workers and apprentices.

Rates are reviewed annually, with new figures typically taking effect each April. Employers must keep pace with these changes, updating payroll systems and contracts to ensure that all eligible workers receive at least the correct statutory rate for their age and status.

Compliance with National Minimum Wage and National Living Wage rules requires attention not only to headline hourly rates but also to working time, deductions and staff-borne costs. Uniforms, tools, travel between sites and some other job-related expenses can reduce pay counted for minimum wage purposes and may inadvertently cause underpayment.

HMRC has robust enforcement powers, including the ability to require arrears, impose penalties of up to 200% of underpayments (capped per worker) and publicly name non-compliant employers. While mistakes can happen, employers who invest in robust systems, regular audits and appropriate training are far better placed to avoid breaches and maintain positive workforce relations.

Looking ahead, employers should monitor future National Minimum Wage and National Living Wage announcements and factor them into financial planning, workforce strategy and broader business decision-making.

Section I: UK National Minimum Wage FAQs

1. What is the difference between the National Minimum Wage and the National Living Wage?

The National Minimum Wage is the statutory minimum pay framework that applies to most workers above school-leaving age and includes several age- and status-based bands. The National Living Wage is the highest band within that framework and applies to most workers aged 21 and over. Lower National Minimum Wage rates apply to younger workers and eligible apprentices.

2. How often does the National Minimum Wage change?

National Minimum Wage and National Living Wage rates are normally reviewed each year. New rates usually apply from April, following recommendations from the Low Pay Commission. Employers must ensure they implement the updated rates from the effective date to remain compliant.

3. What happens if I do not pay the correct National Minimum Wage?

Employers who underpay workers risk enforcement action by HMRC. This can include a requirement to pay arrears of wages, financial penalties of up to 200% of the underpayment (capped per worker), and public naming as a non-compliant employer. In serious cases, there is also the possibility of criminal prosecution.

4. Who is entitled to the UK National Minimum Wage?

Most workers in the UK – including full-time, part-time, temporary, seasonal and agency staff – are entitled to at least the appropriate National Minimum Wage or National Living Wage rate. Apprentices are covered by the regime but may be entitled to the apprentice rate in certain circumstances (for example, where they are under 19 or in the first year of an apprenticeship at 19 or over).

5. Can deductions affect whether I am paying the National Minimum Wage?

Yes. Deductions or costs linked to the worker’s job – such as uniforms, tools and some travel between work locations – can reduce the pay that counts towards the National Minimum Wage or National Living Wage. Employers must ensure that, after taking such deductions into account, the worker still receives at least the correct statutory minimum rate.

6. Do I need to review employment contracts after minimum wage increases?

It is good practice to review employment contracts and pay documentation whenever National Minimum Wage or National Living Wage rates change. While the legal entitlement arises from statute rather than the contract itself, clear documentation reduces the risk of misunderstandings and helps demonstrate that the employer is acting transparently.

7. Are volunteers and interns entitled to the National Minimum Wage?

Genuine volunteers, who give their time freely and receive only genuine out-of-pocket expenses, are not normally entitled to the National Minimum Wage. Many interns, however, are entitled to at least the National Minimum Wage or National Living Wage if they are doing productive work under an obligation to attend and perform tasks. Interns on compulsory higher education placements or engaged only in work-shadowing without performing work may fall outside the regime.

8. How can I ensure ongoing compliance with National Minimum Wage laws?

Employers can support compliance by carrying out regular payroll audits, keeping payroll systems updated with current rates, training HR and payroll teams, and carefully reviewing any job-related costs that workers may bear. Where working patterns are complex, or where status is uncertain, early legal or specialist advice can help avoid problems later.

Section J: Glossary of Key National Minimum Wage Terms

Section K: Additional Resources on the UK National Minimum Wage

Author

Gill Laing

Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.

Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.

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