Most UK employees are entitled to be paid national minimum wage. Every year, the UK government set out the rates for the national minimum wage. These then become the minimum wage that employers can pay their employees.
The government bases the amount on the current cost of living here in the UK. Setting a minimum wage rate makes sure workers are being paid fairly, and reduces poverty.
About National Minimum Wage
The minimum wage rate is reviewed annually, and is a statutory legal right extended to almost every UK worker.
This amount must be paid to all eligible employees. Almost all UK workers are entitled to be paid minimum wage. You should be aged 16 or over, and meet one of the following requirements:
- Work full or part time.
- Work as agency staff.
- Do casual work.
- You are an apprentice (there are conditions in this situation though).
The rate of pay which an employee is entitled to increases with age. The amount payable to workers aged 23 and over is known as the National Living Wage.
National Minimum Wage Increase 2023 & National Living Wage Rates
The minimum wage rates were increased in April 2023.
The rise in wages is based on factors including the economy and the cost of living. Every year the amount is recalculated and since April 2023 the minimum pay rate has been:
- For ages 16 and 17: £4.81.
- For ages 18 to 20: £7.49.
- For ages 21 to 22: £10.18.
- For age 23 and over: £10.42
How Much Did NMW Increase From in 2022 to 2023?
Cost of living has been a very great concern in the UK in recent times. The Minimum Wage rate does take inflation into account, but it is set annually based on recommendations by the Low Pay Commission.
In 2022 the minimum wage rate was:
- For ages 16 and 17: £4.62.
- For ages 18 to 20: £6.83.
- For ages 21 to 22: £9.18.
- For ages 23 and over: £9.42
This means, in April 2023, the national minimum wage increased by:
- 4.1% for 16 and 17 year olds.
- 4.1% for 18 to 20 year olds.
- 9.8% for 21 and 22 year olds.
- 10.6% for age 23 and over.
Who is Entitled to National Minimum Wage?
The majority of workers in the UK are entitled to minimum wage. However, there are some factors to consider in terms of age bracket and employment type.
Firstly, they need to be aged at least 16. The minimum wage depends on your age bracket. You also must be in either full or part time work or offer services on a casual basis. This means you do not work with a company on a permanent contract; you might be called in as and when required.
Apprentices are also entitled to the national minimum wage, but this may be paid at a lower rate to some first year apprentices. Workers with a zero hour contract are also entitled to receive minimum wage.
Not every worker is entitled to minimum wage so it is important to be aware of the exceptions.
If you fall under any of the following then you will not receive it:
- If you are self employed, running your own business with your own clients.
- If you are under the age of 16.
- If you are a nanny who lives with the family and does not pay towards meals or accommodation.
- If you are part of the armed forces.
- If you are in prison.
- If you volunteer.
- If you are doing work experience.
- Certain farm workers.
Apprentices are entitled to be on the minimum wage. Most apprentices have the same right to minimum pay as the rest of the workforce.
The exception to minimum wage laws for apprentices is that regardless of age, all first year apprentices are only entitled to the lowest rate of minimum wage. In 2023 this will be £4.81.
Apprentices are also entitled to be paid for the time they spend at college. Our guide on apprenticeship minimum wage entitlements breaks down the rules on apprentices and what they should be paid.
Young workers are employees who are under 18. These types of worker have different employment rules to other staff members.
Any child over the age of 13 and still considered to be of school age can be paid for work, but will not be eligible for minimum wage. However, those who are aged 16 to 17 are young workers but also eligible for national minium wage.
Young workers under the age of 16 are not liable for NI contributions either so do not need to be on the company’s payroll.
Our guide on minimum wage for under 18’s has more detailed information on the pay rules around this type of employee.
See Also: Under 18 Working Hours – for our in depth guide on the different rules on working hours for young workers.
National Minimum Wage Vs National Living Wage
While looking into the minimum wage, you may have come across the national living wage. We explain the differences between the two now.
We already know that the minimum wage includes anyone who is above school leaving age, up until the age of 22. There are different rates for these ages as set out by UK laws. Employers must adhere to the minimum wage as it is part of employment laws.
The national living wage is for anyone who is working and is 23 and over. This is set higher than the minimum wage and anyone over 23 is entitled to it. It doesn’t matter if you run a small business or a huge corporation, this rate must be paid. Again, as with the minimum wage, the living wage is assessed annually and raised in accordance with the cost of living.
Calculating National Minimum Wage
Let’s look at how employers should be calculating the national minimum wage. This is important as it is the law and they can face hefty fines for failing to meet the threshold.
We are going to break this down into steps below.
1. The type of work the employee does must be established.
Before the hours can be checked and ensured they fall within the minimum wage, you must consider if the employee is:
- Paid an annual salary (salaried hours work).
- Paid by the hour (time work).
- Paid per project (output work).
- Paid in another way (unmeasured work).
2. Consider the employee’s pay reference period.
The pay reference period refers to the period that the wages cover.
So, if an employee is paid weekly then their reference period is 1 week. Whereas, if an employee is paid 4 weekly, then their reference period is 4 weeks.
A calendar month is the maximum length of time this can cover. Employers need to ensure that they are paying the minimum wage for all the hours within the reference period. If an employer fails to pay the minimum age for a reference period, this can be made up in the one directly after this.
3. Work out the average hourly amount an employee earns.
You base this calculation on everything that has been established in steps 1 and 2 above.
You need to establish:
- How much the employee was paid for each reference period.
- Work out the hours they worked for each reference period.
- Carry out the calculation by using the hours worked divided by the total number of hours worked. You then have your average hourly pay amount.
4. Ascertain what minimum rate applies to the employee.
After you have done all of the above, you should refer to the rates of pay per age range.
When you know your employee’s age, you can reference this against the minimum rate for that bracket.
5. Make sure your calculations match at least the minimum wage.
Finally, you need to ensure that what you are paying staff does not fall below the national minimum wage.
If it does then you will be responsible for making up this difference until it does meet the requirements.
Enforcing National Minimum Wage
The national minimum wage makes up part of the UK employment laws and therefore must be followed.
When a business is found not to be paying the minimum wage, the government and HMRC will enforce it.
This will first, result in the employer being required to pay back what is owed to the employee. On top of this, they might be required to pay a fine for breaching the law. These can be hefty – potentially as much as £20,000 per underpaid employee.
What to Do if You are Being Underpaid
If a company refuses or fails to pay the national minimum wage to its employees, there can be serious repercussions.
They are required, by law, to keep thorough records of all employees’ pay throughout the year. These may be checked if the business is under investigation for underpaying its staff.
You may choose to approach the situation informally in the first instance. This involves going directly to your employer to air your concerns.
Should this not work then you can take formal action. This will involve raising a grievance with your employer. Your other options when pursuing the formal route are to contact HMRC to file a complaint or go through the employment tribunal channel.
See Also: ACAS guide on what to do if an employer does not pay minimum wage.
If you think you are being underpaid, the UK GOV minimum wage calculator will help you work out your correct entitlements.
National Minimum Wage in 2024 and Beyond
What does the future have in store for the national minimum wage? The signs are all positive as set out by Learning and Work.
The government is keen to continue to fight for fairness in wages here in the UK. By 2024, the government has spoken of their commitment to bridging that gap between the minimum wage and the average UK salary.
This will bring with it better work conditions, and less staff turnover and will ensure no one is living in work poverty.
As long as the interns are classed as workers then they must be paid the national minimum wage. In situations such as work experience then the minimum wage does not apply.
The minimum wage can include commission. If there are times when you do not make enough commission to earn the minimum wage, then your employer needs to pay this difference.