The UK minimum wage is the legal floor on hourly pay that employers must pay their workers. From April 2026, the National Living Wage (the minimum rate for workers aged 21 and over) is £12.21 per hour, and the minimum rates for younger workers and apprentices are set separately by the Low Pay Commission. Employers must pay at least the applicable rate for every hour worked, calculate pay correctly over the pay reference period, and keep accurate records. Failure to pay the minimum wage can result in financial penalties of up to 200% of the underpayment, public naming by HMRC, and criminal prosecution in the most serious cases.
This guide covers the current rates, who is entitled, how to calculate pay correctly, and the most common compliance traps.
Key takeaways
- From April 2026, the National Living Wage for workers aged 21+ is £12.21 per hour — under the National Minimum Wage Act 1998 and The National Minimum Wage Regulations 2015.
- Workers aged 18–20 are entitled to £10.00 per hour (apprentice rate: £7.55 per hour for under-19s or first year of apprenticeship).
- The minimum wage applies to all workers — including part-time, casual, agency, and zero-hours workers.
- Pay is assessed over the pay reference period — weekly for weekly-paid workers, monthly for monthly-paid workers.
- HMRC can investigate, impose penalties of up to 200% of the underpayment, name non-compliant employers, and prosecute in the most serious cases.
The rates from April 2026
The Low Pay Commission recommends rates each year. From April 2026:
| Age group | Hourly rate |
|---|---|
| 21 and over (National Living Wage) | £12.21 |
| 18–20 | £10.00 |
| Under 18 | £7.55 |
| Apprentice (under 19, or 19+ in first year) | £7.55 |
The rates apply from the first pay reference period beginning on or after 1 April each year.
Who is entitled
The minimum wage applies to all workers — a broad category that includes:
- Full-time and part-time employees
- Zero-hours and casual workers
- Agency workers
- Apprentices (at the apprentice rate during their first year or if under 19)
- Workers on piece rates (must average at least the minimum wage over the pay reference period)
Who is not entitled
The following are not classified as “workers” for minimum wage purposes:
- Self-employed individuals (genuinely self-employed)
- Company directors (unless they also have a contract of employment)
- Volunteers and voluntary workers
- Members of the armed forces
The distinction between “worker” and “self-employed” is a frequent source of HMRC enforcement action, particularly in the gig economy.
How to calculate pay
Pay reference period
The pay reference period is the period over which the worker’s pay is calculated. For most workers:
- Weekly-paid workers — the pay reference period is one week.
- Monthly-paid workers — the pay reference period is one month.
Total pay in the reference period divided by the number of hours worked in that period gives the effective hourly rate. This must be at least the applicable minimum wage rate.
What counts as pay
| Included | Excluded |
|---|---|
| Basic pay | Expenses |
| Commissions and bonuses (paid in the reference period) | Benefits-in-kind |
| Shift premiums | Tips that are not paid through payroll |
| Piece-rate pay (averaged over the reference period) | Accommodation offset (calculated separately) |
| Accommodation provided by the employer (offset at a daily rate) |
Accommodation offset
Where the employer provides accommodation, a daily offset is applied. From April 2026, the offset is £10.00 per day (or a pro rata amount for part of a day). The employer deducts this from the total pay and then divides by hours worked to check the effective hourly rate.
Common calculation errors
1. Including holiday pay in the wrong period
Holiday pay must be counted in the pay reference period in which it is paid. An employer who pays accrued holiday on termination must include that payment in the final pay reference period — and this can push the effective hourly rate above the minimum wage for that period but not for previous periods.
2. Deducting for uniforms or equipment
Deductions for uniforms, safety equipment, or tools that the employer requires the worker to wear or use reduce the effective hourly rate. If the deduction takes the pay below the minimum wage, the employer is in breach — even if the worker agreed to the deduction.
3. Not counting all hours worked
All hours the worker is required to be at the workplace, or performing work, count — including time spent on mandatory training, waiting time (where the worker cannot leave), and travel between work assignments (but not commuting to and from the workplace).
4. Averaging over the wrong period
For workers with variable hours (zero-hours, casual), the employer must pay at least the minimum wage for each pay reference period, not on average over the year. A worker who earns above the minimum wage in most months but below it in one month has been underpaid for that month.
National Living Wage vs. National Minimum Wage
The terms are often used interchangeably, but they are technically different:
| National Minimum Wage | National Living Wage | |
|---|---|---|
| Who | Workers aged under 21 | Workers aged 21 and over |
| Legal status | Statutory minimum (National Minimum Wage Act 1998) | Statutory minimum (same Act) |
| Rate (2026) | £7.55–£10.00 depending on age | £12.21 |
| Enforcement | HMRC | HMRC |
The “National Living Wage” name was introduced in 2016 for the 25+ rate. In April 2024, the age threshold was lowered to 21. Both are legal minima — the term “Living Wage” should not be confused with the voluntary Real Living Wage calculated by the Living Wage Foundation (which is higher and not legally binding).
Enforcement and penalties
HMRC enforces the minimum wage through:
- Complaints — workers can complain to HMRC directly.
- Investigations — HMRC can investigate any employer suspected of non-compliance.
- Notices of underpayment — HMRC issues a notice specifying the underpayment and the penalty.
- Financial penalties — 200% of the underpayment, per worker, with a minimum of £100 per worker.
- Naming — employers who fail to pay are published on the government’s naming list.
- Criminal prosecution — for the most serious or repeated breaches.
The naming list is particularly damaging — it is published publicly and covered by national media. Even a single underpayment of a few pounds per worker can result in naming.
Common pitfalls
1. Treating zero-hours workers differently
Zero-hours workers are entitled to the minimum wage for every hour worked. The fact that the employer does not guarantee hours does not change the entitlement when hours are actually worked.
2. Ignoring the salary sacrifice trap
A salary sacrifice arrangement (e.g., pension contributions, cycle-to-work scheme) reduces the worker’s cash pay. If the reduced pay takes the effective hourly rate below the minimum wage, the employer is in breach — even though the total remuneration (including the sacrificed benefit) exceeds the minimum wage.
3. Not counting training time
Mandatory training hours count as working time for minimum wage purposes. An employer who requires workers to attend training without paying the minimum wage for that time is in breach.
Putting it into practice
Five steps to maintain minimum wage compliance:
- Audit pay rates annually — the rates change in April each year; run a check across all workers before the new rates take effect.
- Check the effective hourly rate — divide total pay (including allowances and premiums) by total hours worked in each pay reference period.
- Review salary sacrifice arrangements — ensure the cash pay after sacrifice still meets the minimum wage.
- Track all hours worked — including mandatory training, travel between assignments, and waiting time.
- Keep records for at least 3 years — HMRC can investigate up to 6 years back, but the employer must keep records for at least the current and previous 3 years.
Tracking hours, allowances, and pay rates across different age groups and employment types is precisely where manual calculations fail. A leave and time management system that captures hours worked and flags when pay falls below the minimum wage keeps you compliant.
Sources
- National Minimum Wage Act 1998 (primary source)
- The National Minimum Wage Regulations 2015
- Low Pay Commission recommendations
- HMRC minimum wage enforcement guidance
This article is general information, not legal advice. Minimum wage rates change annually — confirm the current rates with HMRC or the Low Pay Commission.