Big changes to the UK minimum wage system come into effect from April 2025, with millions of workers getting a new deal.
Further changes have been made in response to wage disparity concerns and economic realities following the pandemic, and these reflect the government’s continuing awareness of the need to balance both issues.
Knowing who qualifies, and how these changes could impact employers and employees both, is key to navigating the new British labour market.
New Structure of Minimum Wage
National Living Wage (NLW) will rise by 4.2%, increasing the hourly rate for workers aged 21 and over from £11.44 to £11.92 from April 2025. That is a significant rise to the rate, about £1,000 for full time workers annually.
This has been described by the government as part of its “ambitious plan” to eradicate low pay across the United Kingdom.
In addition to the NLW rise, NMW rates for younger workers will also increase proportionately:
It will increase to £8.94 per hour from £8.60, a 3.9% rise, for 18-20 year olds.
The National Minimum Wage for 16-17 year olds and apprentices will go up by 3.7%, from £6.40 to £6.64 an hour.
The accommodation offset — the highest amount that employers can offset from wages for providing living accommodation — will rise from £9.99 to £10.42 per day.
Eligibility Guidelines: Who Is Eligible?
The minimum wage laws in the UK are applicable to almost all workers, irrespective of how they’re paid (through hourly pay, annual pay, or payment for piece work), their employment status (temporary, temporary, or agency), their company size, or sector.
But knowing the particulars of the conditions for eligibility allows employers and employees alike to know the rules — and to help get it right for themselves and their workers, too.
Age-Based Eligibility
The main factor determining minimum wage rates in the UK is still age. The new system keeps a differential based on age brackets, meaning older workers will continue to have the highest rates. From April 2025:
Workers over the age of 21 are entitled to the National Living Wage (£11.92)
The middle Belgian wage for people aged 18–20 (£8.94)
16-17 ages work under the minimum wage (£6.64)
This tiered system by age is a break from the previous structure as the government has reduced the age limit on the National Living Wage from 25 to 21 in recent years.
Worker Classification
In order to qualify for minimum wage protection, individuals must be categorized as “workers” according to UK employment law. This classification includes:
Employees of a company with a contract of employment
Most agency workers
Casual workers
Zero-hours contract workers
Apprentices (as with the rate of pay specific to them)
– if you work in agriculture (if you work in agriculture in some areas the Agricultural Wages Order may apply)
Offshore workers
Part-time workers
Foreign workers
Piece rate workers (those who are paid per task rather than per hour) also need to be paid enough for their average hourly earnings to not drop below minimum wage levels.
Who Is Not Covered by Minimum Wage Protection
Not every working person in the UK qualifies for protections under minimum wage legislation. Specific exclusions include:
– The sole traders who operate their own business
Sole directors of a company without employment contracts
Voluntary workers and staff of charities or similar organisations
Working with a family member in a family business (under certain conditions)
Employees on government employment schemes or EU-funded training programs
Members of the armed forces
Share fishermen
Prisoners
Additional Guidance for Apprentices
Apprentices are paid a different minimum wage. Apprentices will be paid £6.64 per hour from April 2025 if they are either:
Under 19 years of age, or
– 19 or over but in the first year of their apprenticeship
Minimum wage: During the first year of apprenticeship, workers aged 19 or over must receive at least the normal minimum wage for their age group.
Calculating Eligible Pay
By knowing what is included in minimum wage calculations, people can be certain the wage law is being properly implemented. Not all types of payments and benefits factor in minimum wage calculations:
Remuneration That Counts Toward Minimum Wage
Basic salary
Performance-related bonuses
Contributions to income tax and National Insurance
– Offsets for misbehavior or bad labor
Expenditures by an employee on goods and services offered by the employer (within limits)
Accommodation deduction (capped at £10.42/day from Apr 2025)
Payments That Do Not Count
Overtime premiums
Shift premiums
– London or certain regional allowances
– Tips, service charge and gratuities
Expenses reimbursement
Perks (other than lodgings)
Additional payments for unsocial hours
Loans from employers
Pension payments
Redundancy payments
Awards for long service
The majority of salary sacrifice arrangements
COVID-19 is not only affecting specific business sectors but also specific categories of workers.
The increases in minimum wage will be applied across different categories of worker, so some groups will benefit more than others.
Low-Paid Sectors
These changes will have the largest effect on workers in traditionally low-paying sectors. Share of workers paid minimum wage, by industry:
Hospitality (pubs restaurants, cafe)
Retail
Social care
Cleaning and domestic work
Agriculture
Food processing
Security
Textile manufacturing
In these areas, employers will be forced to adapt their business models to the added costs of paying higher wages which could result in price hikes, decrease in hours or modifications in operations.
Insecure workers: Part-time and zero-hour workers
For all part-time employees (including those employed on zero-hours contracts), it reduces the wage scale in accordance with how many hours they work. But these workers need to stay vigilant, to make sure their employers are accurately calculating their hours and applying the proper rates.
All time available to the employer — including:
Waiting time (if required to be available)
Security checks
Training sessions that employer required
Work assignment travel (not commuting)
Migrant Workers
Foreign nationals who are legally working in the UK retain full entitlement to the same minimum wage protection offered to British workers. This is true for anyone, no matter the nationality, as long as they have a valid visa to work after Brexit changed the immigration rules.
In the Tests of Resources of the Points-Based Immigration System, the fee must be paid by skilled worker visa holders and seasonal workers to achieve, at a minimum, minimum wage rates (although many visa categories must exceed minimum wage limits to be accepted).
Enforcement and Compliance
This has continued to be the case with the minimum wage enforcement landscape changing in October 2023, with greater penalties and a more robust approach to investigation by HM Revenue and Customs (HMRC).
Fines for Lack of Compliance
For minimum wage violations, employers can expect the following:
Arrears to workers must be singularly paid right away
Fines of 200% of any unpaid wages (up to a maximum of £20,000 per worker)
Risk of the Department for Business and Trade publicly naming and shaming
Criminal prosecution of the most egregious violations
The government has reportedly tripled its enforcement budget, enabling more investigators and a more vigorous pursuit of violators.
The Rights of Workers and What to Report
Employees who suspect they aren’t getting the proper minimum wage can:
Raise it informally with their employer
File a complaint in writing
Seek advice from ACAS (Advisory, Conciliation and Arbitration Service).
Notify HMRC of underpayment using their confidential reporting line
Revisit via employment tribunals
Claims for back pay can be pursued for a period of 6 years in England, Wales and Northern Ireland (5 years in Scotland) so our workers have plenty of time to resolve any past underpayment.
Economic Background and Projections
The 2025 minimum wage hikes come amid a murky economic backdrop. In the wake of the tumultuous post-pandemic recovery and inflationary pressures of the early 2020s, the government has tried to strike a balance between protecting workers and ensuring economic stability.
The National Living Wage has been set for the target of two-thirds of median earnings by 2026, according to the Low Pay Commission, which recommend minimum wage rates.
The increases in 2025 are one more step toward that, although economic uncertainties are still on the table.
Economists say that while these increases aren’t massive, they are helping to drive consumer spending and could create upward pressure on wages throughout the lower and middle brackets.
Some small business associations, however, have criticized the measure as costly at a time when the economy is still adjusting in the wake of the pandemic.
Regional Differences and the Living Wage Foundation
Whereas the minimum wage operates uniformly throughout the UK, the cost of living can vary dramatically from region to region.
The independent Living Wage Foundation still calculates and promotes voluntary “real living wage” rates that are more than statutory minimums.
From April 2025 onwards, their suggested hourly rates will be £13.85 (London) and £12.50 (rest of UK), which is more in line with the true cost of living than the statutory minimums. More than 14,000 employers have voluntarily signed up for the higher rates, benefiting around 450,000 workers.
In high-cost areas in particular, these voluntary rates continue to be of particular relevance, as statutory minimums continue to be insufficient to provide real living incomes.
Where to Go From Here
These April 2025 minimum wage upratings are further milestones in the steady evolution of the UK’s approach to regulating wages. These changes will benefit millions of workers, but will also require adaptation by businesses, and sustained oversight by regulators.
For example, if the economy undergoes a post-pandemic transformation in which work phenomena increasingly befitting of the minimum wage become more limited, then that fact should be reflected in minimum wage policies.
Workers should know their rights while employers need to put systems and budgets in place to navigate these significant changes.
Familiarity with eligibility criteria, calculation methods and enforcement mechanisms contributes to ensuring that these wage protections live up to their intention: to provide a meaningful floor to compensation that promotes dignified work and economic participation throughout British society.