National Minimum Wage

The National Living Wage (NLW) and National Minimum Wage (NMW) are enforced by the Fair Work Agency (since 7 April 2026, under s.107 of the Employment Rights Act 2025 — previously HMRC), which can investigate employers, issue penalties of up to 200% of arrears (minimum £100, maximum £20,000 per worker), and publicly name non-compliant employers. From April 2026, the NLW for workers aged 21 and over is £12.71/hour. The NMW for 18–20 year olds is £10.85/hour, for under-18s £8.00/hour, and for apprentices £8.00/hour. Almost all workers are entitled — the key exceptions are genuinely self-employed people, volunteers, and some family workers. Tips and service charges cannot count towards the NMW unless paid through payroll. Workers who believe they have been underpaid can report the employer via the Pay and Work Rights helpline (0300 123 1100) or via GOV.UK online.

What it means in practice. The minimum wage is not a headline hourly figure written into your contract — it is a test applied to what you actually received divided by the hours you actually worked in the pay reference period. That is why underpayment so often happens at employers who genuinely believe they are paying the rate. Unpaid time spent on the premises, travel between assignments during the working day, mandatory training, and time spent opening up or closing down all count as working time. Deductions for uniforms, tools, or a required till shortage can drag the effective rate below the minimum even where the payslip looks compliant.

A worked example. Josef is 23 and paid £12.71 an hour for a 40-hour week, which is exactly the National Living Wage. His employer requires him to arrive fifteen minutes before each shift to change into a branded uniform and be briefed, and to stay ten minutes after closing to cash up. That is an extra two hours and five minutes a week that is unpaid. His real hourly rate is therefore below the legal minimum, and the employer owes arrears for every week that pattern ran — calculated at the rate in force at the time of payment, not the rate when the work was done.

Common pitfalls. Tips are the classic misconception: they cannot count towards the minimum wage at all, even when paid through payroll. Being called self-employed does not remove the right either, because the test is whether you are genuinely in business on your own account — see worker status. Salaried staff working long unpaid overtime can also fall below the minimum once the hours are divided out. And birthdays matter: the rate changes from the start of the pay reference period after you move into a new age band.

How it relates to other terms. The minimum wage underpins the value of Statutory Sick Pay, holiday pay, and redundancy pay, all of which are calculated from actual earnings. Workers on a zero hours contract and agency workers are entitled to it in full. Enforcement runs through PAYE records, which is why keeping your own note of hours is so valuable when the employer's records are incomplete.

What to do next. Work through our minimum wage guide to calculate your true hourly rate over a full pay period, then use pay disputes to raise it with your employer in writing before escalating. Employers should read minimum wage duties for employers, since arrears are repayable in full plus a penalty regardless of intent.