National Living Wage and National Minimum Wage – are you following the rules?

The National Minimum Wage was introduced in 1999 to protect low-paid staff and improve the

ability of companies to compete fairly. The level is set annually based on recommendations from the

Low Pay Commission, an independent body comprising of employers, unions and experts.

This has been supported by the National Living Wage since 2016. It was originally introduced for

those over 25 years old, and seen as a way to support families and those who had been in jobs and

developed skills. The age this applies to has since been dropped to 21 years old.

It is a legal requirement

To be clear it is against the law for an employer to pay less than these given Wage levels. You can be

reported to HMRC and will be fined. This can damage your reputation and the financial robustness

of your company.

It is your responsibility to pay the correct amount

Whether the National Minimum Wage or National Living Wage applies depends on the age of the

employee and if they are an apprentice. This means it is important that you keep accurate

employment records and change wages according to the age of your employee.

Who it applies to

The National Minimum Wage requires you to be school-leaving age. It is irrelevant if your employee

is still at school – they just need to be school-leaving age. This means they have turned 16 that

school year (between 1 September and 1 July) and it is after 30 June. For those who turn 16 between

2 July and 31 August, they can’t leave school until 30 June the following year so although they are

16, they are not deemed to be school-leaving age.

The National Living Wage applies to workers aged 21 and over.

How much are the rates?

The rates are reviewed every 1 April. As of 1 April 2024, the hourly rates are:

Under 18 years old £6.40

18 – 20 years old £8.60

21 and over £11.44

What about apprentices?

Apprentices receive the National Minimum Wage of £6.40 if they are under 19 years old, or in their

first year of apprenticeship at any age. After the first year, they are treated the same as others in

their age group.

Therefore a 24-year-old apprentice in their first year would receive £6.40 but in their second year

would receive £11.44.

Does this apply to all employees?

On the whole, yes. Some groups don’t qualify:

 self-employed

 company directors

 volunteers

 members of the armed forces

 people living and working in a religious community

 prisoners

Budget Impact

And of course, as your younger employees have birthdays it is important to budget for the impact on

wage costs – as well as making sure you alter the hourly rate in time for the wages to be processed.

Next Steps

In 2023 over 200 firms had been fined for not complying, impacting 63,000 employees. Some of the

firms were big household names such as WH Smith and Marks and Spencer. It is easy for mistakes to

happen – perhaps for a birthday to be missed. If you are worried and would like some help, just give

us a call.