A Guide to the National Minimum Wage and Living Wage
17/03/2021
Whether you’re a business owner or an employee, it’s important you’re up to date with the National Minimum Wage (NMW) and the National Living Wage (NLW).
It is estimated that there are 2 million workers (or 7% of the UK working population) currently on the NMW.
The Low Pay Commission suggests that jobs that pay this wage are concentrated within cleaning & maintenance, retail, and hospitality.
This guide will look at what the NMW and NLW are, the current rates, and an apprentice wage.
What is the National Minimum Wage?
The NMW is the legal minimum hourly rate of pay for workers over the compulsory school age, generally 16 years of age.
It is based on the recommendations of the Low Pay Commission.
There are different minimum wage rates for workers depending on their age.
But what about the NLW?
From April 2021, the top rate (called the National Living Wage) applies to workers aged 23 and over.
It previously applied to workers aged 25 and over. Other rates are known as National Minimum Wage rates.
For ease of reference, in this guide when we say ‘minimum wage’ we mean a collective term for the NMW and the NLW.
How Much is the Minimum Wage?
The UK has a relatively high minimum wage compared with other OECD countries. The UK ranks as the 8th highest out of these countries when taking into account the cost of living in each country respectively.
The hourly rate for the minimum wage depends on your age and whether you’re an apprentice.
You must be at least:
- School leaving age to get the National Minimum Wage
- Aged 25 to get the National Living Wage - the minimum wage will still apply for workers aged 24 and under
From 1 April 2021, the National Living Wage will apply if you’re aged 23 and over.
Let’s have a look at what the rates are.
Current rates (from 1 April 2021)
These rates are for the National Living Wage (for those aged 23 and over) and the National Minimum Wage (for those of at least school leaving age) from 1 April 2021. The rates change every April.
|
|
23 and over
|
21 to 22
|
18 to 20
|
Under 18
|
Apprentice
|
| April 2021
|
£8.91
|
£8.36
|
£6.56
|
£4.62
|
£4.30
|
Apprentices
Apprentices are entitled to the apprentice rate if they’re either:
- aged under 19
- aged 19 or over and in the first year of their apprenticeship
For example, an apprentice aged 22 in the first year of their apprenticeship is entitled to a minimum hourly rate of £4.30.
Apprentices are entitled to the minimum wage for their age if they both:
- are aged 19 or over
- have completed the first year of their apprenticeship
For example, an apprentice aged 22 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £8.20.
We hope our guide has given a helpful overview of all things minimum wage.
These rates usually change yearly so make sure you keep up to date – this is important for both employers and workers to keep an eye on.
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