Want to know more about the upcoming increase in the National Minimum Wage for 2025-26, and how to ensure that you’re paying your employees correctly in the coming year? Read on for more information.
A Quick Overview: NMW 2025
The upcoming changes to the National Minimum Wage were announced in Autumn 2024.
Below is an outline of the NMW applicable from 1st April 2025.
| Age Group | Rate (from 1 April 2025) |
| National Living Wage (21 and over) | £12.21 per hour |
| 18-20 Year Olds | £10.00 per hour |
| 16-17 Year Olds | £7.55 per hour |
| Apprentices | £7.55 per hour |
Employees under school leaving age
Employees under school leaving age do not, by law, have to be paid the National Minimum Wage. However, children aged 14 and above can be employed. In some local council areas, children as young as 13 can also work. Nevertheless, there are restrictions on child employment which govern how many hours an employee under school leaving age can work.
Children cannot work before 7am or after 7pm
They cannot work more than 4 hours without taking a break of at least one hour
They cannot work for more than one hour before school unless allowed by local bylaws
In addition, there are specific rules that define the difference between term time and school holidays.
During school term time, a child can work a maximum of 12 hours per week. However, no more than 2 hours on a school day or Sunday are allowed by law.
A child aged 14 can work a maximum of 5 hours on Saturdays
A child aged 15–16 can work a maximum of 8 hours on Saturdays
For more details, you can visit the Gov.UK website:
https://www.gov.uk/child-employment
Apprentices
Apprentices in the first year of their apprenticeship are entitled to the Apprenticeship rate. This is regardless of their age.
However, from the second year of their apprenticeship onwards, they are entitled to the NMW based on their age.
Salary Sacrifice and National Minimum Wage
Salary sacrifice is an arrangement where the employer and employee agree to reduce the employee’s cash earnings in exchange for receiving a benefit. For example, this could include pension contributions, childcare vouchers, cycle-to-work schemes, or car lease schemes.
Importantly, where part of the salary is sacrificed, the employer must ensure that the employee’s cash earnings do not fall below the National Minimum Wage threshold.
Ensuring your are paying National Minimum Wage
Hourly paid employees
Hourly paid employees must be paid the NMW based on their age and the hours worked in the pay period. This may include variable hours if they have a zero-hours contract. Alternatively, it could be their contractual hours plus any additional hours worked, paid at the applicable overtime rate stated in their contract of employment.
An employer is allowed to make certain deductions, even if they reduce take-home pay below the NMW. These include:
Tax and National insurance
Pension contributions
Repayment of an advance or overpayment
Trade union fees
A charge for accommodation provided by the employer. More information can be found about this topic on the Gov.UK website here: https://www.gov.uk/expenses-and-benefits-accommodation
However, where deductions are made for other expenses, such as tools, uniforms, travel costs (excluding commuting), or mandatory training, employers must ensure these do not reduce pay below the NMW.
Salaried employees
An employer must ensure that the monthly gross pay of an employee is at or above NMW for their age. See below for an example
Employee, aged 23, working 37.5 hours per week
Hourly rate: £12.21
Multiply by 37.5 (hours) to calculate weekly rate: £457.88
Multiply by 52 (weeks) to calculate annual salary: £23,809.50
Divide by 12 (months) to calculate monthly salary: 1,984.13
Please note, this example may vary depending on the number of hours worked. Nevertheless, the calculation method provided will help you ensure compliance with NMW rules.
Use the guide below for a quick check of the National Minimum Wage (NMW) salary, based on age and the number of hours worked per week.
For ease of reference, examples are provided for 35, 37.5, and 40 working hours per week.
| Age Group and Hourly Rate | ||||
| National Living Wage (21 and over) | 35 hours | 37.5 hours | 40 hours | |
| £12.21 per hour | Weekly Gross | £427.35 | £457.88 | £488.40 |
| Monthly Gross | £1,851.85 | £1,984.13 | £2,116.40 | |
| Annual Gross | £22,222.20 | £23,809.50 | £25,396.80 | |
| 18-20 Year Olds | 35 hours | 37.5 hours | 40 hours | |
| £10.00 per hour | Weekly Gross | £350.00 | £375.00 | £400.00 |
| Monthly Gross | £1,516.67 | £1,625.00 | £1,733.33 | |
| Annual Gross | £18,200.00 | £19,500.00 | £20,800.00 | |
| 16-17 Year Olds | 35 hours | 37.5 hours | 40 hours | |
| £7.55 per hour | Weekly Gross | £264.25 | £283.13 | £302.00 |
| Monthly Gross | £1,145.08 | £1,226.88 | £1,308.67 | |
| Annual Gross | £13,741.00 | £14,722.50 | £15,704.00 | |
| Apprentices | 35 hours | 37.5 hours | 40 hours | |
| £7.55 per hour | Weekly Gross | £264.25 | £283.13 | £302.00 |
| Monthly Gross | £1,145.08 | £1,226.88 | £1,308.67 | |
| Annual Gross | £13,741.00 | £14,722.50 | £15,704.00 | |
There have also been updates to Employer’s National Insurance within payroll this year, which you can read more about in our blog:
If you’d like to chat about the changes to National Minimum Wage for 2025-26, Employer’s NI, or your payroll in general, we’d be happy to help. Whether you’re looking for guidance or considering outsourcing your payroll, our team is here to support you.
Call us today on 01273 56 92 27 or complete our Get in Touch form — we’d love to hear from you!
