The National Minimum Wage (NMW) is the legal floor below which no employer in the United Kingdom may pay a worker. Introduced on 1 January 2019, the NMW is reviewed annually by the National Minimum Wage Commission and adjusted to keep pace with inflation and the cost of living. For employers, understanding the NMW is not optional — it is a legal obligation, and non-compliance carries serious consequences.
Current National Minimum Wage Rate (2026)
From 1 April 2026, the National Living Wage for workers aged 21 and over is £12.71 per hour. Lower National Minimum Wage rates apply to younger workers and apprentices. The Low Pay Commission recommends the rates each year and changes take effect on 1 April. Check GOV.UK for the current figures before running payroll.
Key figure: The National Living Wage is £12.71 per hour. On a 37.5-hour week that is roughly £2,065 per month (£12.71 × 37.5 hours × 52 weeks / 12 months).
The UK sets different rates by age, with a separate rate for apprentices. From 1 April 2026:
| Category | Hourly rate | 37.5-hour week |
|---|---|---|
| National Living Wage (21 and over) | £12.71 | £476.63 |
| 18 to 20 | £11.00 | £412.50 |
| Under 18 | £8.00 | £300.00 |
| Apprentice | £8.00 | £300.00 |
Who Does the NMW Apply To?
The National Minimum Wage Act (No. 9 of 2018) applies to all workers in the United Kingdom, with very limited exceptions. This includes:
- Full-time employees
- Part-time employees
- Casual and temporary workers
- Domestic workers
- Farm workers
- Workers employed through temporary employment services (labour brokers)
The Act defines a "worker" broadly — essentially anyone who works for another person and receives, or is entitled to receive, remuneration. Independent contractors are excluded, but the Employment Rights Act 1996 tests of who is an "employee" apply, meaning that a worker labelled as a contractor may still be protected if the relationship is effectively one of employment.
Special Categories and Exemptions
While the NMW applies broadly, certain categories of workers have different rates or arrangements:
Domestic Workers
Domestic workers — nannies, cleaners, carers — are covered by the National Minimum Wage in the same way as any other worker. If they are aged 21 or over, the National Living Wage of £12.71 per hour applies. Employers of domestic staff must operate PAYE once earnings reach the Lower Earnings Limit.
Farm Workers
Agricultural workers in England are covered by the standard National Minimum Wage. In Scotland and Wales, separate agricultural wage orders can set higher minimum rates and additional entitlements, so check the relevant agricultural wages board.
Apprentices
The apprentice rate of £8.00 per hour applies to apprentices under 19, and to those aged 19 and over who are in the first year of their apprenticeship. After the first year, an apprentice aged 19 or over moves to the rate for their age band.
Workers Who Cannot Claim NMW
The following individuals are excluded from the NMW Act:
- Members of the UK National Defence Force (SANDF)
- Members of the National Intelligence Agency
- Volunteers who receive no remuneration
NMW Exemptions for Employers
Employers who genuinely cannot afford to pay the NMW may apply for an exemption. This is not a blanket opt-out — the process is strict and requires evidence:
- The employer must apply to the Low Pay Commission
- The application must include audited financial statements or other proof of financial hardship
- The employer must demonstrate that paying the NMW would result in job losses
- An exemption, if granted, is temporary (typically 12 months) and may allow a rate no lower than 90% of the NMW
- The employer must consult with affected employees or their union before applying
Exemptions are rarely granted and are closely scrutinised. An employer who simply pays below the NMW without an exemption is in breach of the law.
How to Calculate Monthly Pay from the Hourly NMW
Many employment contracts in the United Kingdom specify a monthly salary rather than an hourly rate. To convert the hourly NMW to a monthly figure, you need to know the employee's ordinary hours of work. The Employment Rights Act 1996 (Employment Rights Act 1996) sets maximum ordinary hours at 45 hours per week.
The standard formula is:
Monthly salary = Hourly rate x Weekly hours x 52 weeks / 12 months
| Weekly Hours | Hourly Rate | Monthly Equivalent |
|---|---|---|
| 40 hours | £12.71 | £508.40 |
| 37.5 hours (standard) | £12.71 | £476.63 |
| 30 hours (part-time) | £12.71 | £381.30 |
| 25 hours (part-time) | £12.71 | £317.75 |
| 20 hours (part-time) | £12.71 | £254.20 |
Need to run these conversions quickly? Use our hourly rate converter to instantly see how an hourly rate translates to weekly, monthly, and annual figures.
Employer Obligations Under the NMW Act
Employers have several obligations beyond simply paying the correct rate:
1. Pay at Least the NMW
Every worker must receive at least £12.71 per hour for each hour worked. This applies to all forms of remuneration including basic salary, piece-rate work, and commission-based arrangements. If a worker on piece-rate or commission does not earn the equivalent of the NMW for the hours worked, the employer must top up the difference.
2. Display the NMW Notice
Employers must display a copy of the NMW rate at the workplace in a prominent place where workers can read it. The notice must be in an official language that the majority of workers can understand.
3. Keep Accurate Records
The employer must keep records of each employee's hours worked and wages paid for at least three years. These records must be available for inspection by a labour inspector at any time.
4. Provide Compliant Payslips
Under the Employment Rights Act 1996, employers must provide a payslip with every payment. The payslip must clearly show the employee's hourly rate, hours worked, gross pay, deductions (PAYE, National Insurance), and net pay. This is essential for demonstrating NMW compliance. Use our free payslip generator to create Employment Rights Act 1996-compliant payslips in minutes.
5. Do Not Make Prohibited Deductions
An employer may not reduce hours or make deductions that effectively bring the employee's rate below the NMW. Deductions for accommodation, meals, or transport may only be made if they comply with the Employment Rights Act 1996 and do not reduce the cash component below the minimum.
Penalties for Non-Compliance
The NMW Act provides for serious penalties for employers who fail to comply:
- First offence: A fine of the greater of twice the employee's monthly wage or twice the amount that should have been paid
- Subsequent offences: A fine of the greater of three times the employee's monthly wage or three times the amount underpaid
- Labour Court prosecution: Repeat offenders may be referred to the Labour Court for more severe sanctions
- Back pay: The employer must pay the worker the difference between what was paid and what should have been paid, plus interest
Warning: Labour inspectors from the GOV.UK can conduct unannounced workplace inspections. If they find NMW violations, they will issue a compliance order requiring immediate rectification and payment of arrears.
How the NMW Affects Payslips
When generating payslips, ensure the hourly rate or monthly equivalent meets or exceeds the NMW. Here is an example payslip for a worker on the minimum wage (45-hour week):
| Description | Amount |
|---|---|
| Gross Salary (£12.71/hr x 195 hrs) | £540 |
| PAYE | £0 |
| National Insurance (Employee 1%) | -£5.38 |
| Net Pay | £530 |
Note that a worker on the NMW with no other income will typically fall below the PAYE tax threshold, meaning no income tax is deducted. However, National Insurance is still applicable.
NMW and Overtime
The Employment Rights Act 1996 requires overtime to be paid at 1.5 times the employee's normal rate. For a worker on the NMW, overtime must be paid at a minimum of:
£12.71 x 1.5 = £4.14 per hour
Work on Sundays must be paid at double the normal rate (£5.52/hr) unless the employee ordinarily works on Sundays. Overtime may not exceed 10 hours per week, and the total working hours (ordinary plus overtime) may not exceed 55 hours per week.
NMW and the Employment Allowance (Employment Allowance)
Employers who hire young workers (aged 18-29) and pay them at least the NMW may qualify for the Employment Allowance (Employment Allowance). The Employment Allowance allows employers to reduce their PAYE payments to HMRC. Importantly, an employee must earn at least the NMW for the employer to claim Employment Allowance — paying below minimum wage disqualifies the employer from the incentive.
Common NMW Mistakes
- Not adjusting for annual increases — the NMW rate changes every March; update payroll systems promptly
- Using the wrong rate for apprenticeship workers — apprenticeship has a separate, lower rate; do not apply it to non-apprenticeship workers
- Assuming domestic workers are exempt — they are fully covered since 2022
- Not paying overtime correctly — overtime must be at least 1.5x the NMW rate, not the standard NMW rate
- Failing to display the NMW notice — this is a legal requirement that labour inspectors check
- Confusing gross and net pay — the NMW applies to the gross hourly rate before deductions
Resources and Further Reading
- GOV.UK — publishes the latest NMW rate and exemption application forms
- Employment Rights Act 1996 (Employment Rights Act 1996) — governs hours of work, overtime, and payslip requirements
- National Minimum Wage Act (No. 9 of 2018) — the primary legislation establishing the NMW
- PAYE Calculator — check if your employee owes tax on their minimum-wage salary
- Hourly Rate Converter — convert between hourly, weekly, monthly, and annual pay
Staying compliant with the National Minimum Wage is straightforward if you keep your payroll updated and issue proper payslips. Our free payslip generator automatically handles the calculations — enter the salary, and it produces a Employment Rights Act 1996-compliant payslip with PAYE and National Insurance worked out for you.