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National minimum wage, real living wage and pay

Overview
Overview

The national minimum wage (NMW) applies to all workers and is paid at different rates according to age. There is a separate rate for apprentices, and a National Living Wage (NLW) that applies to workers aged 23 and over (this will be expanded to included workers aged 21 and over from 1 April 2024).

The current  NMW/NLW rates (which represent gross pay) are as follows:

Age Rate from 1 April 2023
Workers aged 23 and over (NLW)* £10.42
Workers aged 21-22* £10.18 
Development rate for workers aged 18-20 £7.49 
Young workers rate for workers aged 16-17 £5.28 
Apprentices under 19, or over 19 and in the first year of the apprenticeship £5.28 

The current and upcoming NMW/NLW rates (which represent gross pay) are as follows:

Age

Rate from 1 April 2023

Rate from 1 April 2024

Workers aged 23 and over (NLW)*

£10.42

-

Workers aged 21‒22

£10.18

-

National Living Wage for workers aged 21 and over

-

£11.44

National minimum wage for workers aged 18-20

£ 7.49

£8.60

Young workers rate for workers aged 16‒17

£ 5.28

£6.40

Apprentices under 19, or over 19 and in the first year of the apprenticeship

£ 5.28

£6.40

Employers paying output workers, including homeworkers, piece rates (payment according to the number of items produced or tasks completed) must either pay the minimum wage for every hour worked, or a “fair piece rate” (currently set at 120% of the NMW).

The minimum wage rates are reviewed annually. Any changes take effect from 1 April.

* From 1 April 2024, NLW will be applied to all workers aged 21 and over. This follows a change from 1 April 2021 when NLW was applied to all workers aged 23 and over.

Key points

  • All workers, except those who are genuinely self-employed, are entitled to receive the NMW/NLW
  • Gross pay is used to calculate whether an eligible worker has been paid the minimum wage
  • The NMW/NLW is calculated by including most financial awards or payments, but excluding allowances such as regional or on-call allowances, unsocial hours payments, tips and gratuities, or any benefits in kind, with the exception of accommodation up to a specified amount
  • Employers can average the hourly rate of pay over the pay period
  • Where the single hourly rate that a worker is entitled to changes, for example they move between the age pay bands, it applies from the first day of the next pay period; for example, if a worker turns 23 on January 25, and their next pay reference period begins on February 1, they will receive the NLW from February 1.

  • Non-compliance can result in an enforcement notice requiring the employer to pay the difference between what was actually paid and what the worker should have received under the NMW legislation, calculated at the time of the payment, not when it should have been paid (resulting in potentially more money being owed where the NMW rate has risen since the underpayment). Further non-compliance could result in the issue of a penalty notice and financial penalties.

Recent developments

National Living Wage to be paid to those aged 21 and over; new rates announced

22 November 2023

The National Living Wage will increase to £11.44 per hour and will apply to those aged 21 and over.

The National Minimum Wage, for those aged 18 to 20, is also increasing to £8.60 per hour.

For those 16 and 17 years old, and apprentices, the minimum pay will be £6.40 per hour.

 

Real Living Wage increases by 10%

24 October 2023

The new rates of the Real Living Wage were announced on 24 October 2023. Employers who have voluntarily signed up to pay this rate now have six months to implement the increased rates. The new rates are as follows:

  • For workers in London: up from £11.95 to £13.15 per hour

  • For workers outside of London (including Scotland/Wales/Northern Ireland): up from £10.90 to £12 per hour