Rates of National Minimum Wage and Living Wage.

The National Minimum Wage (NMW) rates per hour will increase from 1st April 2018 so that NMW applicable to pay reference periods beginning on or after 1st April are as follows :

  • The main adult rate (for workers aged 25 and over – also known as the National Living Wage)  is £7.83
  • Rate for workers aged between 21 and 24 is £7.38
  • Rate for workers aged between 18 and 20 is £5.90
  • Rate for workers aged under 18 (but over school age) is £4.20
  • Rate for apprentices is £3.70*

*This is the rate for apprentices who are between the ages of 16 to 18 and also those aged 19 or over who are in their first year. All other apprentices are entitled to the National Minimum Wage for their age band.

The National Living Wage of £7.83 per hour  is compulsory as opposed to the Living Wage (currently set at £8.75 per hour) which a voluntary pay rate independently set by the Living Wage Foundation and is calculated according to the basic cost of living in the UK.


The government has increased the penalties imposed on employers that underpay their workers in breach of the National Minimum Wage.  For pay reference periods starting on or after 26th May 2015 the maximum NMW penalty has been changed from £20,000 per notice to £20,000 per worker.

There was also propeosed further legislation whereby a prison term could be imposed under certain circumstances.

2018 has already seen one high profile court case being brought under this legislation

National Minimum Wage – Common Errors

Contained within the Employer Bulletin released by HMRC in December 2016 was an extremely useful “Top 5 Errors” article.

  • Rates – Are you paying the correct rate? If not there is a risk of underpaying workers. This can happen when fail to implement the annual increases, miss workers key birtdays as they move from one band to another, or fail to apply the apprentice rates correctly. (our payroll bureau service will monitor employees for these key changes)
  • Deductions – Are you making deductions from an employees pay that takes a workers pay below NMW/NLW rates? This can occur if you make deductions for items connected with the job such as uniforms, deductions for services provided by the employer such as meals or transport, or deductions for accomodatio beyond the permitted accommodation offset amount.
  • Additional Pay – Are you including top ups to pay that do not count as pay for the purposes of NMW/NLW? This can happen when you include payments such as shift allowances under certain circumstances or customer tips or bonuses when calculating a workers pay for NMW/NLW purposes.
  • Status of the worker – Are you engaging people who should be classed as workers? This can happen when employers mistakenly treat workers as volunteers, interns or self employed.
  • Working Time – Are yopu including all the time a worker is is actually working? If not you would run the risk that you do not include additional hours worked but not paid. These could be short but regular periods of time, for example, time spent helping to shut up shop or clear security after a workers shift has ended, or could be longer periods of time spent training or ‘down time’ waiting. Other working time errors can occur with travelling time if it is in connection with the workers job such as between assignments.