What is the minimum wage?
The National Minimum Wage (NMW) is the minimum hourly rate that must by law be paid to all workers and employees in the UK between the school leaving age (usually 16) up to the age of 21.
The minimum wage increases every April. The minimum wage rates as of 1 April 2026 are:
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for those aged 21 and over - £12.71
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for those aged 18 to 20 - £10.85
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for under 18s - £8
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for apprentices - £8. This applies to apprentices who are:
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aged under 19, or
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aged 19 or over and are in the first year of their apprenticeship
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All employers, irrespective of size, are required to pay the NMW to those who are eligible.
What is the National Living Wage?
The National Living Wage (NLW) is the minimum hourly rate that must be paid to workers and employees who are aged 21 or over. Although it’s technically called the National Living Wage, it’s often referred to as the ‘minimum wage’. Until 1 April 2024, only those aged 23 and above were eligible for the NLW.
From 1 April 2026, the new NLW rate is £12.71 per hour.
As with the NMW, all employers must pay the NLW or a higher rate as a legal obligation – this is not negotiable. The NLW rate is reviewed annually, with changes generally coming into effect at the start of April.
What is the recommended living wage?
The Living Wage Foundation has been recommending its own version of a ‘living wage since before the NLW came into effect. It’s known as the ‘real Living Wage’ and is an independently calculated hourly rate reflecting the actual cost of living. It is higher than the NLW and, although many employers choose to adopt it, there is no legal obligation to pay these rates. As of 1 May 2026, the living wage as recommended by the Foundation is £14.80 per hour in London and £13.45 per hour outside London.
What are the penalties for not paying the correct wage?
It can be a criminal offence for employers not to pay the NMW or NLW to eligible workers, or to fake payment records.
The Fair Work Agency (FWA) has significant powers to punish employers who fail to comply, including the ability to inspect workplaces and seize records. If the FWA finds that an employer hasn’t paid the right amount, they'll usually issue a notice of underpayment (NoU).
Employers who receive a NoU or are found to be underpaying staff have to:
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have to make up any shortfalls to the worker immediately, usually calculated at the current day's rates, to ensure they aren't losing out
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pay a penalty of up to 200% of the total underpayment (up to a maximum of £20,000 for each affected worker or employee)
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face being 'named and shamed' publicly by the government in a list of businesses that have breached the law
The FWA can also bring cases to an employment tribunal on a worker's behalf and, in the most serious cases of exploitation or faking records, pursue criminal prosecutions.
Who is entitled to the minimum wage?
Most workers and employees are entitled to the minimum wage, but there are some exceptions. For example, freelancers who are genuinely self-employed are not covered by the NMW or NLW rules.
However, it is important to establish somebody’s employment status before neglecting to pay them minimum wage, to ensure that they would not be legally considered workers or employees (and therefore entitled to NMW or NLW). Determining whether somebody is self-employed or a worker can be difficult and depends on various factors, such as the degree of control someone has over their work.
For more information, read Consultants, workers, and employees and Gig economy workers.
Can I include tips when calculating minimum wage?
Tips and other gratuities (eg services charges) cannot be used to count towards the NMW or NLW. These payments should not be taken into account by employers when calculating NMW or NLW payments.
For more information, read Tips, tronc, and service charges.
Do zero-hours workers need to be paid the national minimum wage?
Anyone working under a Zero-hours contract will be classed as either an employee or worker and, as such, will be entitled to the NMW or NLW.
Are there any circumstances where an employer doesn’t have to pay minimum wage?
Businesses are not required to pay the minimum wage to consultants, freelancers, or contractors who are genuinely self-employed.
Certain other categories of people are also not automatically entitled to the NMW or NLW, including:
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higher and further education students on work placements lasting up to one year
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children below the school leaving age (although other restrictions apply in respect of child workers)
For a full list of categories of people not entitled to the minimum wage rates, see the government’s guidance on the minimum wage.
If you need to ensure your staff's pay and benefits are clearly documented and legally compliant, you can make an Employment contract, a Zero-hours contract, or a Senior employment contract. For any specific questions about wage entitlements, do not hesitate to Ask a lawyer.
