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The national minimum wage and the national living wage

National minimum wage

An employer must pay their workers a minimum amount per hour as defined by law. The national minimum wage (NMW) applies to workers who are under the age of 25.

Who is covered by the NMW?

NMW applies to all workers, with certain exceptions such as:

  • those under the age of 16
  • apprentices (applies to apprentices under 19 and those aged 19 or over who are in their first year)
  • those who are genuinely self-employed
  • family members working in the family business
  • people working and living as part of a family (such as au pairs)
  • voluntary workers.

National living wage

The National Living Wage (NLW) is the minimum pay per hour most workers aged 25 and over are entitled to by law.

The rate will depend on a worker's age and if they are an apprentice.

What are the hourly rates of NMW and NLW?

Age group  April 2018   April 2017
 National Living Wage (25+)  £7.83  £7.50
 NMW (21-24)  £7.38  £7.05
 NMW (18-20)  £5.90  £5.60
 NMW (16-17)  £4.20  £4.05
 Apprentice NMW  £3.70  £3.50
 Accommodation Offset*  £7.00 per day £6.40 per day

As Sports Direct and John Lewis have found out - failing to comply can be very costly in terms of penalties and publicity. HMRC routinely name and shame employers who have broken minimum wage rules.

For that reason we recommend that you look further at employer obligations which are set out in HMRC's guide to national minimum wage enforcement.

This includes:

  • Entitlement to the NMW and NLW
  • Powers of compliance officers
  • Notices of underpayment
  • Penalties
  • Minimum wage penalty percentages
  • Criminal offences.

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