UK National Minimum Wage: everything you need to know

Whether you’ve got a large multi-national business or you’re just starting up, understanding the UK National Minimum Wage is a must.

But with rates regularly changing, it’s understandable if you’re struggling to keep up.

However, getting the Minimum Wage wrong isn’t an option.

Fear not! In this blog, we cover everything you need to know about the National Minimum Wage 2024.

What is the National Minimum Wage?

In the UK, the National Minimum Wage is the lowest pay rate workers are legally entitled to.

This minimum wage helps ensure workers are receiving fair compensation for their efforts.

Initially introduced by the Labour Government, the National Minimum Wage aimed to lift many individuals out of poverty and set a standard for employers.

Note: employment contracts below the Minimum Wage are not legally binding.

The difference between Minimum Wage, Living Wage and Apprentice Wage

The National Minimum Wage (NMW), National Living Wage (NLW) and Apprentice Wage are often grouped, and rightly so.

Many simply refer to them as the Minimum Wage.

In essence, the difference is that those aged 21 and over receive the National Living Wage and those under the age of 21 (but at least school leaving age) receive the National Minimum Wage.

As for Apprentice Wages, these apply to apprentices who are either:

• Under the age of 19
• Aged 19+ and in the first year of their apprenticeship

What is the Minimum Wage in 2024?

As of April 2024, the current Minimum, Living and Apprentice Wage hourly rates are as follows:

How does the National Minimum Wage work?

The UK National Minimum Wage establishes a legal requirement for employers to pay their workers at least a certain amount based on age and employment status.

There are several types of work to consider when calculating the NMW and NLW.

They are:

• Salaried hours work
• Time work
• Output work
• Unmeasured work

The following are included in working time:

• Training
• On-call
• Working through unpaid breaks
• Dressing time (into uniform)

Employees have the right to report employers who fail to pay them the official minimum wage, helping further enforce the standards.

It’s worth noting some employees may also be entitled to other compensation, such as overtime pay or unsocial hours pay, which can further boost their overall earnings.

Who doesn’t qualify for the National Minimum Wage?

According to Gov.co.uk, workers don’t qualify for the Minimum Wage or Living Wage if they fall under the following criteria:

• Self-employed people running their own business
• Company directors
• People who are volunteers or voluntary workers
• Workers on a government employment programme, such as the Work Programme
• Members of the armed forces
• Family members of the employer living in the employer’s home
• Workers younger than school leaving age (usually 16)
• Higher and further education students on work experience or a work placement up to one year
• People shadowing others at work
• Workers on government pre-apprenticeships schemes
• People on the following European Union (EU) programmes: Leonardo da Vinci, Erasmus+, Comenius
• People working on a Jobcentre Plus Work trial for up to 6 weeks
• Share fishermen
• Prisoners
• People living and working in a religious community

What happens if you ignore the Minimum Wage?

If a business ignores the Minimum Wage (paying less, not more), there can be severe consequences.

Firstly, employers may be liable for back pay, meaning they must compensate employees for the wages they should have received – this can add up quickly and create significant financial strain.

Additionally, businesses that fail to comply may be subject to significant fines and penalties imposed by HM Revenue and Customs (HMRC).

Perhaps most detrimental in the long-term, ignoring Minimum Wage laws can majorly damage a business’ reputation, leading to distrust among employees and making it far harder to effectively recruit good people.

Will the Minimum Wage change?

Yes.

The National Minimum Wage changes every year to reflect median wages and economic conditions as well as facing Government reviews and recommendations from the Low Pay Commission.

The Government typically announces their changes to the Minimum Wage during their Autumn Budget, with the new rates being scheduled to come into force the following April.

National Minimum Wage across the years

The Minimum Wage has changed each year to reflect the state of the nation.

Historically, the Living Wage was given to a slightly older age group before being brought down to 21 and over.

Before 1^st April 2021, the Living Wage was only for those aged 25 and over.

Then, following April 2021 but before April 2024, the Living Wage was only for those aged 23 and over.

For a bit more of a blast from the past, in 2000, the Minimum Wage for those aged 22+ was £3.60 and in 2010, the Minimum Wage for those aged 21+ was £5.93.

Labour changes

Following their election win, Labour is aiming to further increase the Minimum Wage and update how it is determined.

Labour has stated the Low Pay Commission’s remit will change – alongside the median wages and economic conditions, the National Minimum Wage will also reflect the current cost of living.

Additionally, Labour has plans to remove the age bands, helping standardise pay for all adult workers.

We are still awaiting a timeline for these proposed changes; you can learn more about Labour’s plans here.

Note: there is also new legislation due to come in next year, requiring employers to report actual working hours via a Real-Time Information (RTI) system each pay period, which you can learn more about here.

Payroll software: a better way to handle wages

Hopefully, this blog has given you all the information you need regarding the Minimum Wage.

The next question is: how do you manage the NMW and pay people accurately?

Manually handling your payroll is prone to human error, as well as being quite time-consuming.

We advise you to seek modern payroll software, which can streamline the payment process and automate key tasks, saving you a vast amount of time.

If you’re in the market for a new payroll solution, consider IRIS Payroll, perfect for any size of business.

Learn more about IRIS Payroll here.

Alternatively, for those looking to outsource their payroll, take a look at IRIS Fully Managed Payroll.