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National Minimum Wage and National Living Wage

The National Minimum Wage (NMW) is the minimum pay per hour most workers under the age of 25 are entitled to by law.

The government's National Living Wage (NLW) is the minimum pay per hour most workers aged 25 and over are entitled to by law.

The rate will depend on a worker's age and if they are an apprentice.

Current rates

  • £7.50 per hour for ages 25 and over
  • £7.05 per hour for ages 21 to 24
  • £5.60 per hour for ages 18 to 20
  • £4.05 per hour for school leaving age to 17

Rates

Date of rate25 and over21 to 2418 to 20Under 18Apprentice
From April 2018£7.83£7.38£5.90£4.20£3.70
From April 2017 to
March 2018
£7.50£7.05£5.60£4.05£3.50
From October 2016 to
March 2017
£7.20£6.95£5.55£4.00£3.40
From April 2016 to
September 2016
£7.20£6.70£5.30£3.87£3.30

A new rate will apply to the next pay reference period that begins on or after:

  • the date a rate increase begins
  • the date an employee reaches a new age bracket

These rates are reviewed annually by the Low Pay Commission.


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Exemptions

There are a number of people who are not entitled to the NMW/NLW.

The NMW and NLW do not apply to:

  • Self-employed people.
  • Volunteers or voluntary workers.
  • Company directors.
  • Some agricultural workers
  • Some family members, or people who live in the family home of the employer who undertake household tasks.

All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW or NLW.

HM Revenue & Customs (HMRC) can take employers to court for not paying the NMW/NLW.

Apprentices

The apprenticeship rate only applies to:

  • apprentices aged under 19
  • apprentices aged 19 or over who are in the first year of their apprenticeship

Apprentices aged 19 or over in their second year of apprenticeship must receive the national minimum wage or national living wage rate their age entitles them to.

Agricultural Workers

Agricultural and horticultural workers in England employed after 1st October 2013 must be paid the appropriate NMW or NLW rate (see above).

If they were already employed before 1 October 2013, they will still be entitled to the same terms and conditions set under their contract of employment. This can include overtime rates, agricultural wages, sick pay or dog allowance. DEFRA will continue to handle complaints about non-payment or non-compliance for up to six years after the breach occurred.

Agricultural and horticultural workers in Scotland must be paid the highest rate that applies to them from the Agricultural Minimum Wage, the NMW or the NLW.

Agricultural and horticultural workers in Wales must be paid the highest rate that applies to them from the Agricultural Minimum Wage, the NMW or the NLW.

Family members

A worker is not eligible for the NMW or the NLW if they are a member of the employer's family and:

  • resides in the family home of the employer
  • shares in the tasks and activities of the family

A worker is not eligible for the NMW or the NLW if they reside in the family home of the employer and:

  • is not a member of that family, but is treated as such in regards to the provision of living accommodation, meals and the sharing of tasks and leisure activities
  • is not liable to any deductions and does not make any payment to the employer, or any other person in respect to the provision of the living accommodation or meals
  • if the work had been done by a member of the employer's family, it would not have been treated as work

Non-payment of the NMW or NLW

It is against the law for employers to pay workers less than the National Minimum Wage or National Living Wage, or to falsify payment records.

If an employer doesn't pay the correct rate, a worker should talk to their employer and try to resolve the issue informally first. If this doesn't work a worker may make a formal grievance to their employer.

A worker can make a complaint to HMRC who will investigate the complaint. If HMRC find that an employer hasn't paid at least the National Minimum Wage, they can send a notice of arrears plus a penalty for not paying the correct rate of pay to the worker.

With the introduction of the National Living Wage the penalty for non-payment will be 200% of the amount owed, unless the arrears are paid within 14 days.

The maximum fine for non-payment will be £20,000 per worker. However, employers who fail to pay will be banned from being a company director for up to 15 years.

The difference between the National Living Wage and the Living Wage

The government's National Living Wage is different from the Living Wage, which is an hourly rate of pay and updated annually.

The Living Wage is set independently by the Living Wage Foundation and is calculated according to the basic cost of living in the UK. Employers choose to pay the Living Wage on a voluntary basis.

Further training

This topic is addressed in Acas Employment Law Update training. View course listings. You may also benefit from viewing our Employment Law update timetable.