What is the National Minimum Wage?
The National Minimum Wage (NMW) and National Living Wage (NLW) set the minimum hourly rates that employers must legally pay their workers in the UK. The rates are reviewed annually and typically increase each April to reflect changes in living costs and economic conditions.
As an employer, it’s crucial to stay informed about these changes to ensure your business remains compliant with employment legislation and avoids potential penalties.
What are the new rates from April 2025?
The government has announced significant increases to the minimum wage rates that will take effect from 1st April 2025. These increases represent substantial rises across all age groups:
Age group | April 2024 (current rate) | April 2025 | Increase |
21 and over (NLW) | £11.44 | £12.21 | 6.7% |
18 to 20 | £8.60 | £10.00 | 16.3% |
Under 18 | £6.40 | £7.55 | 18.0% |
Apprentice | £6.40 | £7.55 | 18.0% |
The most notable changes include:
- The National Living Wage (for those aged 21 and over) will increase from £11.44 to £12.21 per hour
- The rate for 18-20 year olds will see a substantial jump from £8.60 to £10.00 per hour
- Both under 18s and apprentice rates will increase from £6.40 to £7.55 per hour
Who is entitled to these rates?
The National Living Wage applies to all workers aged 21 and over. This represents a change from previous years, as the age threshold was lowered from 23 to 21 in April 2024.
For those under 21, the National Minimum Wage applies based on age brackets. Specific rules apply to apprentices:
- Apprentices aged under 19, or those aged 19 or over who are in the first year of their apprenticeship, are entitled to the apprentice rate (£7.55 from April 2025)
- Apprentices aged 19 or over who have completed the first year of their apprenticeship are entitled to the minimum wage for their age
How should employers prepare for these changes?
As an employer, you need to take several steps to ensure you’re ready for the April 2025 increases:
- Review your payroll systems to ensure they will be updated for the new rates
- Identify which employees will be affected by the rate changes
- Budget for the increased wage costs across your business
- Consider whether any salary differentials between roles need to be maintained
- Update any relevant documentation, contracts or policies that reference wage rates
It’s important to note that these rates are the legal minimum that must be paid. Many employers choose to pay higher rates to attract and retain talent, particularly in competitive sectors.
How can we help?
As your outsourced payroll provider, we ensure that your business remains compliant with all minimum wage legislation. Our fully managed payroll service includes:
- Automatic updates to our systems for the new rates
- Identification of all affected employees
- Calculation of the correct pay for each worker
- Comprehensive reporting on wage costs
- Guidance on maintaining compliance with minimum wage regulations
Allow us to take care of your minimum wage compliance and alleviate the potential headache that comes with staying up-to-date with legislative changes. You can be totally confident that all your obligations are met while you focus on running your business.
If you have any questions about the National Minimum Wage increases or how they will affect your business, please email us at enquiries@payrollhub.co.uk, and we will be happy to answer them.