The National Minimum Wage (NMW) and National Living Wage (NLW) are essential components of the UK’s employment field.
These rates set the minimum hourly pay that employers must pay their workers.
Understanding these rates is useful for both employees and employers to ensure fair wages and compliance with employment law.Â
What is the National Minimum Wage?
The National Minimum Wage is the legal minimum hourly pay rate that most workers are entitled to by law.
It was introduced to ensure fair pay for workers. However, the rate varies based on your age.
What is the National Living Wage?
The National Living Wage is a higher rate of the National Minimum Wage. It applies to workers aged 21 and over.
The government sets the National Living Wage, aiming to provide a wage that meets the basic cost of living.
Who is Entitled to the National Minimum Wage?
Most workers in the UK are entitled to the National Minimum Wage.
This includes full-time, part-time, temporary, and permanent employees.
However, there are exceptions, such as self-employed individuals and company directors.
How Much is the National Minimum Wage and National Living Wage?
The rates for the National Minimum Wage and National Living Wage change annually.
For the 2024/2025 tax year, the rates are as follows:
- National Living Wage (21 years old and over): £11.44 per hour
- 23 to 20 years old: £8.60 per hour
- 18 to 20 years old: £7.48 per hour
- Under 18: £6.80 per hour
- Apprentice: £6.80 per hour
What if I’m Paid Less Than the National Minimum Wage?
If you believe you are being underpaid, you have the right to take action.
You can contact the government’s enforcement body, HMRC, to report the issue.
They will investigate and may take action against your employer.
How Often is the National Minimum Wage Reviewed?
The government regularly reviews the National Minimum Wage and National Living Wage to ensure they keep pace with living costs.
The rates are typically announced in the autumn and come into effect the following April.
What Other Factors Affect My Pay?
While the National Minimum Wage is the legal minimum, your actual pay can be influenced by various factors, including:
- Overtime: You might earn more than the minimum wage for overtime hours.
- Tips and gratuities: These are generally not included in your minimum wage calculation but can supplement your income.
- Pensions: Your employer might contribute to a pension scheme, which is additional to your wages.
- Holiday pay: You are entitled to paid holiday, and the value of this should be included in your hourly pay calculation.
What is the Difference Between the National Living Wage and the Real Living Wage?
The National Living Wage is set by the government, while the Real Living Wage is calculated independently based on the cost of living.
The Real Living Wage is often higher than the National Living Wage and is seen as a more accurate reflection of what people need to earn to live decently.
How Can I Check if I’m Being Paid Correctly?
If you’re unsure whether you’re being paid the correct minimum wage, you can use the government’s online calculator to check your pay.
You can also contact your employer or a trade union for advice.