The National Minimum Wage (NMW) and National Living Wage (NLW) are the minimum amount of pay a worker should receive in the UK, based on certain criteria. In this blog, we’ll cover what these terms mean and who’s eligible.
What is the National Minimum Wage?
The National Minimum Wage is the legal minimum employers must pay their staff, as set by the government.
There are a few different terms covering different entitlements.
The rates for the minimum wage depend on your age, and whether you’re an apprentice.
As of 1st April 2025, the National Living Wage will increase to £12.21 an hour (for those aged 21 & over) and the National Minimum Wage will increase to £10 an hour (for those ages 18-20) and to £7.55 an hour (for those ages 16-17).
What is the National Living Wage?
The NLW applies to all workers over 21 and will increase to £12.21 as of April 2025.
What is the Real Living Wage?
The ‘Real Living Wage’ is calculated independently of the government by the Living Wage Foundation.
The Real Living Wage is a rate that is voluntarily paid by more than 7,000 UK businesses to help their employees meet everyday needs. It is not a legal requirement.
The National Minimum Wage and National Living Wage change at the start of April each year.
What’s the difference between National Minimum Wage and National Living Wage?
Confusingly, the NLW was simply a renaming of the NMW. Which one you’re entitled to depends on your age. Workers aged 23 and 24 are now entitled to the lower National Living Wage.
Whereas the NLW is the minimum rate employers are allowed to pay employees, the Real Living Wage is the payment rate recommended by the independent Living Wage Foundation, among other organisations. Although it isn’t a legal requirement for employers to pay the Real Living Wage, increasing numbers of businesses are choosing to do so in recognition of the financial challenges faced by many employees.
The rates are calculated annually by the Resolution Foundation which is overseen by the Living Wage Commission and are based on the most recent and accurate data regarding living standards in London and the UK.
Who is entitled to receive the National Minimum Wage or National Living Wage?
Workers who are old enough to leave school are entitled to the National Living Wage.
The exception to this is apprentices under the age of 19, or who are 19 or over and in the first year of their apprenticeship. Apprentices over the age of 19 who have completed their first year of apprenticeship are entitled to the National Minimum Wage.
Some people are not entitled to receive the National Minimum Wage. These include:
The National Minimum Wage and National Living Wage change at the start of April each year.
What happens if a business does not pay employees the correct minimum wage?
HM Revenue and Customs (HMRC) are streamlining their investigations and audit process in a bid to expose and reprimand employers who underpay their staff.
It is the employer’s responsibility to pay the correct National Minimum Wage and National Living Wage rates to all eligible employers and apprentices.
If there has been an underpayment, employers are requested to immediately pay any arrears as well as any fines.
Employers who underpay must also pay a penalty to HMRC of double the amount it had to pay to the employee. And that’s not all. Employers who receive a notice of underpayment will have their name added to an online “name and shame” record, something which can be more damaging than the fine itself.
HMRC officers are entitled to check payment records at any time. This can be prompted from an employee or worker complaint, or simply as part of an audit.
Further guidance
The government recently released a minimum wage calculator to help employers and employees work out National Minimum Wage and National Living Wage eligibility.