Definition
The minimum hourly rate of pay that employers must legally pay most workers in the UK. Different rates apply depending on the worker's age and whether they are an apprentice. The rates are reviewed annually by the Low Pay Commission.
UK Context
The National Minimum Wage Act 1998 established the framework. HMRC enforces compliance and can issue penalties of up to 200% of arrears owed. Employers who fail to pay are named publicly. The NMW applies to workers regardless of contract type, including zero-hours contracts.
Best Practices
- Review pay rates every April when new rates take effect and update payroll systems promptly
- Ensure deductions such as uniform costs do not reduce effective hourly pay below the minimum wage
- Keep accurate records of hours worked, especially for salaried staff and those paid by output
Frequently Asked Questions
What are the current NMW rates?
Rates change annually in April. As of April 2025, the main rates are: 21 and over (National Living Wage) 12.21 pounds, 18-20 at 10.00 pounds, under 18 at 7.55 pounds, and apprentice rate at 7.55 pounds. Always check gov.uk for the most current rates.
What is the difference between NMW and National Living Wage?
The National Living Wage is the highest band of the National Minimum Wage, applying to workers aged 21 and over. It is a statutory rate set by the government, distinct from the voluntary Living Wage set by the Living Wage Foundation.