The National Minimum Wage is the minimum legal amount per hour (£) a business can pay an employee in the UK. The UK government constantly reviews this amount and adjusts the figure yearly in line with the cost of living. The UK’s most recent minimum wage increase took effect on 1st April 2023.
In this article, we’ll cover everything you need to know about the National Living Wage 2023, National Minimum Wage 2023, National Living Wage 2024 and National Minimum Wage 2024 – including the difference between them.
Table of Contents
|Apprentice Rate||1) National Minimum Wage||2) National Minimum Wage||3) National Minimum Wage||
National Living Wage
Real Living Wage
London Living Wage
|Apprentice||Under 18||18 to 20||21 to 22||23 and over||Outside London||Inside
|April 2023 – March 2024||£5.28||£5.28||£7.49||£10.18||£10.42||£10.90||£11.95|
|April 2024 onwards||£6.40||£6.40||£8.60||£11.44||£11.44||£12.00||£13.15|
What is the National Minimum Wage?
The National Minimum Wage (NMW) is the minimum hourly rate that workers under the age of 23 are entitled to if they are one of the following:
- Full-time worker.
- Part-time worker.
- Casual worker.
- Agency worker.
- Apprentice, in some instances. (See below for more on this)
The goal of minimum wages is to safeguard employees from unfairly low compensation.
The national minimum wage 2024 will be £8.60 per hour for 18-20 year olds and £6.40 per hour for 16-17 year olds.
What is the National Living Wage?
The National Living Wage rate (NLW) is the minimum hourly rate employers must pay workers aged 23 and over. The age threshold was already reduced from 25 to 23 years in 2021 but will be reduced even further to 21 years by 2024, as a result of advice from the Low Pay Commission.
The National Living Wage rate is currently £10.42 per hour. The National Living Wage 2024 will be £11.44 per hour.
What are the Current Minimum Wage and National Living Wage Rates?
The living wage and minimum wage increased on 1st April 2023. This increase was based on advice from the Low Pay Commission (LPC) and means that a full-time worker will receive nearly £150 more each month than the previous year. This additional income came as welcome news to employees across the UK who are feeling the pinch of the growing cost of living crisis.
Currently, the National Living Wage hourly rate is £10.42. The rate for 21-22 year olds is £10.18, for 18-20 year olds is £7.49 and for 16-17 year olds is £5.28.
What will the Minimum Wage be in 2024 (UK)?
From April 2024, the National Minimum Wage will increase by almost 10% to £11.44 per hour from the current rate of £10.42. The change was announced in November 2023 in a bid to benefit over 2 million low-wage workers across the nation. Speaking of the raise, Finance Minister Jeremy Hunt said the Conservative party were dedicated to “improving the lives of working people” by “ending low pay”. This increase is above the current rate of inflation.
Earlier in 2023, the government also committed to making the National Living Wage equal two-thirds of median earnings by 2024 for workers aged 21 and over. Plus, they said the age banding for the National Living Wage could decrease from 23 to 21.
Who is Entitled to National Minimum Wage?
Although the national minimum wage rates are set by an hourly amount, it is not limited to employees that are paid per hour. The rate applies to all workers across the UK, including:
- Those working part-time or casually.
- Workers in training.
- Offshore workers.
The new 2023 rates are the same across Scotland, Northern Ireland, Wales and England and will come into effect on the same date everywhere.
There are a few groups of workers to whom these legal requirements do not apply. Self-employed workers, unpaid volunteers, company directors and members of family cohabiting with their employer are not entitled to the minimum wage.
What is the Minimum Apprentice Wage?
In order to be entitled to the minimum apprentice wage (£5.28 in 2023 and £6.40 from April 2024), the apprentice must be:
- Aged under 19.
- Aged 19 or over and in the first year of their apprenticeship.
However, apprentices that are both 19 or over and have completed the first year of their apprenticeship should not be held to the apprentice rate. In these instances, they would be entitled to the minimum wage for their age. For example, a 20 year old apprentice in the second year of their apprenticeship after April 2023 would be entitled to £7.49 an hour rather than the standard apprentice rate.
How Can You Calculate National Minimum Wage?
You can use an employees’ working hours to calculate their correct rate of pay . Working hours are defined by the government as time spent:
- At work and meant to be working.
- Training or travelling as part of your job.
- Working/business lunches.
- Working abroad as part of your job.
- Working excess hours (paid overtime or employer-requested unpaid overtime).
- Working on-call at your place of work.
- Any contractual ‘working time’.
- Commute travel time (only if your place of work is not fixed).
The government does not include:
- Non-working breaks.
- Time spent on non-work related calls.
- Standard commute between home and fixed workplace.
- Leave (holidays, sick leave or maternity leave).
- Time spent striking or on industrial action.
- Time spent at the workplace whilst not working or unavailable to work.
To pay wages accurately in line with legal requirements, you can use the government’s step-by-step guide to calculate the average hourly rate and the number of hours worked over a specific period. The government’s National Minimum Wage and Living Wage calculator for employers is another helpful tool to check your paying employees correctly and haven’t previously underpaid them.
What is the Real Living Wage and London Living Wage 2023?
There’s one more benchmark to consider. The real Living Wage is independently decided by the Living Wage Foundation and is completely voluntary. Their core belief is that UK staff aged 18 or over deserve to be paid enough to cover their everyday living costs. For that reason, it’s calculated on a basket of household goods and services and is always higher than both the minimum and living wage.
Over 11,000 UK companies now take part in the scheme, including a few big fish such as Nationwide and Google. Their rates have resulted in pay rises for 300,000 workers.
In line with the other wage rate increases, the real Living Wage increased by 10.1% in 2023, becoming £10.90/hour for the UK. The London Living Wage 2023 is £11.95/hour.
Both of these rates will increase by 10% from April 2024. Outside of London, the Real Living Wage 2024 will be £12/hour. The London Living Wage 2024 will be £13.15.
How Could Paying the Real Living Wage Benefit Your Company?
Although you are not legally required to do so, raising your employees’ wages to meet these benchmarks could benefit your company in multiple ways.
For starters, it will improve your profile as an employer and help you to attract top talent. A recent CareerWallet survey found that only 25% of all employees in the UK have not thought about changing role or demanding a pay rise due to the rising cost of living.This speaks volumes about the growing importance the UK workforce are placing on salary. A more generous pay package will also positively impact your existing employees, in turn improving morale and reducing your turnover rate.
It doesn’t hurt you as an employer, either. Paying employees enough to get by rather than scrape by can only improve perceptions of your brand. A better brand reputation can boost customer loyalty and help you stand out to prospects.
What Was the National Minimum Wage in the UK in 2022?
Here are the UK 2022 National Living Wage and National Minimum Wage rates:
Managing Time Tracking and Payroll All in One Place
To know whether your business is meeting minimum wage requirements, you must know the hours worked by your employees and their hourly rates. The easiest way to do this is by using time tracking software. Factorial’s all-in-one HR solution allows you to:
- Personalise work schedules for your employees.
- Compare their actual working hours vs expected.
- Track your employees’ working hours daily with clock in and clock out features.
- Approve or reject timesheets instantly.
- Pay extra hours easily.
- Monitor employee absence and attendance.
- Create custom time reports.
With Factorial, you can also digitalise and centralise all of your payroll-related processes using our payroll management software, making payroll painless. You can manage employee expenses and periodic compensations from the same place, too.
Combining time and payroll management with Factorial’s software will give you more visibility and flexibility, enabling you to keep up to date with legal wage requirements and pay your employees a fair salary.
How did National Minimum Wage and Living Wage Change in 2023?
On 1st April 2023, national minimum wage rose by around 9.7%, 10.8%, 9.6% and 9.7% (varying by age bracket).
Why did UK Minimum Wage rates increase?
The Low Pay Commission (LPC) are an independent body that advise the government about the National Minimum Wage and National Living Wage. They unanimously decided to increase rates in 2023 to help low-paid workers across the nation as cost of living soars.
Is minimum wage going up in 2024?
Yes. From April 2024, the National Minimum Wage will increase by almost 10% to £11.44 per hour from the current rate of £10.42 for those aged 21 and over. For under 18s, it will increase from £5.28 to £6.40. For 18-20 year olds, it will increase from £7.49 to £8.60.
What will minimum wage be in 2024?
It will be £11.44 per hour for workers aged 21 and over, £8.60 for 18-20 year olds, and £6.40 for under 18s.
What is the accommodation offset?
When accommodation is provided by an employer to their employees, this can be taken into account when working out the minimum or living wage. This rule is called the accommodation offset. It is currently £9.10 a day or £63.70 a week. From April 2024, it will be £9.99 a day or £69.93 per week.