Minimum Wage and National Living Wage - an overview

The National Living Wage

The Government’s National Living Wage was introduced on 1 April 2016 for all working people aged 25 and over, and is currently set at £7.50 per hour. The current National Minimum Wage for those under the age of 25 still applies.

Key points

  • Most workers over school leaving age will be entitled to receive the NMW.
  • The NMW /NLW rate is reviewed annually by the Low Pay Commission.
  • HM Revenue & Customs (HMRC) can take employers to court for not paying the NMW/NLW.
  • There are a number of exemptions to those who receive the NMW/NLW. These do not relate to the size of the business, sector, job or region.
  • The compulsory National Living Wage is the national rate set for people aged 25 and over.

Rates of pay

It is important to note that these rates, which came into force 1 October 2016, apply to pay reference periods beginning on or after that date.

The rates from 1 April 2017 are:

  • £7.50 per hour – 25 yrs old and over
  • £7.05 per hour – 21-24 yrs old
  • £5.60 per hour – 18-20 yrs old
  • £4.05 per hour – 16-17 yrs old
  • £3.50 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

Exemptions

There are a number of people who are not entitled to the NMW/NLW.

  • Self-employed people.
  • Volunteers or voluntary workers.
  • Company directors.
  • Family members or people who live in the family home of the employer who undertakes household tasks.

All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW.