The National Living Wage for workers aged 21 and over is £12.21 per hour from April 2025. Separate rates apply for younger workers and apprentices. Paying below the applicable rate — even accidentally — is unlawful. HMRC can require you to repay underpaid workers, impose a penalty of up to 200% of the underpayment, and name your business publicly. There is no minimum hours threshold: even a worker doing one shift must receive at least the minimum wage.
Current National Minimum Wage rates (from April 2025)
| Category | Hourly rate | |---|---| | National Living Wage (aged 21+) | £12.21 | | 18 to 20 year old rate | £10.00 | | 16 to 17 year old rate | £7.55 | | Apprentice rate | £7.55 |
The apprentice rate applies to apprentices who are either under 19, or aged 19 and over in the first year of their apprenticeship. Once an apprentice is 19 or over and past their first year, they are entitled to the rate for their age group.
Rates are reviewed each April by the Low Pay Commission and usually increase. Always check the current figures on gov.uk before April each year.
Who is entitled to the National Minimum Wage?
The NMW applies to:
- Employees (full-time, part-time, temporary, zero hours)
- Workers (including agency workers, casual workers, and home workers)
- Apprentices (at the apprentice rate)
- Agricultural workers
It does not apply to:
- Genuinely self-employed people (contractors who run their own business)
- Volunteers who receive no pay
- Company directors who take no salary
- Students on unpaid work experience as part of a UK-based higher or further education course (for up to 1 year)
What counts as pay for NMW purposes?
Not all money paid to a worker counts as pay for NMW calculation purposes.
Counts as pay:
- Basic pay
- Performance bonuses and incentive pay
- Tips paid through the employer's payroll (from October 2024, all tips must be passed to workers in full)
Does not count as pay:
- Employer pension contributions
- Overtime or shift premiums (the premium element only)
- Tips paid directly to staff by customers (cash tips)
- Loans or advances
- Redundancy payments
This means a worker on a salary that looks above minimum wage may still be underpaid — for example, if deductions for uniform, tools, or accommodation bring their effective hourly rate below the minimum.
Common underpayment traps
Uniform deductions. If you require employees to buy a uniform from you or deduct the cost from their pay, this can reduce their pay below the minimum wage.
Salary sacrifice. Some salary sacrifice arrangements can result in effective pay below the NMW. Check with your payroll provider.
Unpaid training time. Mandatory training (including induction) is working time and must be paid at least at the minimum wage.
Travel between assignments. For workers who travel between multiple sites, travel time between assignments (not commuting) counts as working time.
Salaried workers and long hours. A salaried worker earning just above minimum wage on a 37.5-hour week must not regularly work additional unpaid hours, as this can reduce their effective hourly rate below the minimum.
HMRC enforcement
HMRC enforces the National Minimum Wage through investigations triggered by worker complaints, routine inspections, and targeted sector campaigns.
If HMRC finds underpayment, the employer must:
- Pay the underpaid workers the amount owed (calculated at current NMW rates, not the rate at the time of underpayment)
- Pay a financial penalty of 200% of the total underpayment, up to £20,000 per worker
Employers can also be named publicly on the HMRC "name and shame" list, which has included large retailers and hospitality businesses.
Payroll records you must keep
You must keep payroll records that allow HMRC to verify NMW compliance for 3 years from the end of the pay reference period. Records should include:
- Hours worked by each worker
- Pay received
- Any deductions made
For hourly workers, a time and attendance record or a signed timesheet is the standard method. For salaried workers, a record of contracted hours plus any overtime worked is needed.
Frequently asked questions
Can I pay someone less than minimum wage if they agree to it? No. The right to be paid at least the National Minimum Wage cannot be waived by agreement. Any contract term that pays below minimum wage is void.
What if a worker is paid a weekly or monthly salary — how do I check compliance? Divide the total pay received in a pay reference period by the total hours worked in that period. The result must be at least the applicable minimum wage rate. For salaried workers with variable hours, monitor overtime carefully.
Does the National Living Wage apply to workers on zero hours contracts? Yes. The NMW applies to all workers regardless of contract type. A zero hours worker must receive at least the applicable minimum wage for every hour worked.
Are interns entitled to the National Minimum Wage? If the intern is doing work that a paid employee would do, they are almost certainly a worker and entitled to the NMW. Calling someone an intern or volunteer does not determine their legal status. Only genuine volunteers with no employment relationship are exempt.
What is the difference between the National Living Wage and the Real Living Wage? The National Living Wage (£12.21/hr) is the statutory minimum set by the government. The Real Living Wage (currently £12.60/hr outside London, £13.85 in London) is a voluntary rate set by the Living Wage Foundation, based on actual living costs. Paying the Real Living Wage is a business choice, not a legal obligation.
