National Minimum Wage 2026/27: Rates, Rights and Employer Obligations

National Minimum Wage 2026/27

The National Living Wage (NLW) and National Minimum Wage (NMW) set legal floors on what employers must pay their workers per hour. Understanding the rates, who qualifies, and what counts towards the minimum wage protects workers and helps employers meet their legal obligations.

2026/27 Rates (from April 2026)

These rates are set by the government following Low Pay Commission recommendations each autumn, taking effect the following April.

Annual Equivalent Salaries

A full-time 37.5-hour week at the NLW produces annual earnings above the Personal Allowance, so most full-time NLW workers will pay some income tax and employee NI in 2026/27.

Who Is Entitled to Minimum Wage?

Entitled:

• Employees (on any type of contract — permanent, temporary, zero-hours)
• Workers (including agency workers, those doing piecework, home workers)
• People on apprenticeships
• Seafarers

Not entitled:

• Genuinely self-employed people
• Company directors (unless also workers under a contract)
• Volunteers and voluntary workers
• Family members living in the employer's home

What Counts Towards Minimum Wage

Counts:

• Basic pay
• Performance-related pay (bonuses, commission) — averaged over the pay reference period
• Tips paid through payroll (processed via TRONC by employer)

Does NOT count:

• Tips given directly by customers to workers
• Overtime premium (the premium element — standard time element counts)
• Shift allowances, call-out payments
• Pension employer contributions
• Benefits in kind (company cars, meal vouchers)
• Living accommodation (partial allowance: up to £9.99/day offset against NMW)

Salary Sacrifice and National Minimum Wage

Salary sacrifice arrangements cannot reduce a worker's effective hourly pay below the National Living/Minimum Wage in any pay reference period. This is a critical constraint for employers operating pension salary sacrifice schemes with lower-paid staff.

Example: Worker on £13.50/hour sacrificing £1.20/hour equivalent for pension cannot sacrifice more than £0.79/hour (keeping take-home at NLW £12.71/hour).

Always check that salary sacrifice schemes don't inadvertently breach NMW for your lowest-paid workers.

Employer Obligations

Pay correctly: Apply the correct rate for each worker's age and status. Age changes mid-year — if an employee turns 21 during the year, the NLW rate applies from their birthday (or next pay period).

Keep records: Employer must keep adequate wage records for 3 years. HMRC can inspect these at any time.

No deductions that take workers below NMW: Deductions for uniforms, tools, or equipment that bring average hourly pay below the NMW are unlawful (unless the employer provides and maintains the item).

Enforcement and Penalties

HMRC enforces National Minimum Wage compliance through targeted and routine inspections. Penalties:

• Arrears of underpayment must be repaid in full
• Financial penalty: 100% of the underpayment, up to £20,000 per worker
• Publicly named on HMRC's national minimum wage non-compliance register ("naming and shaming")

Common NMW breaches identified by HMRC:

1. Unlawful deductions for uniforms, tools, accommodation above allowed offset
2. Not paying for all hours worked (including training time, on-call time, travel between sites)
3. Apprentice rates incorrectly applied (wrong age or year of apprenticeship)
4. Salary sacrifice reducing pay below NMW

National Living Wage vs Real Living Wage

The National Living Wage is the statutory minimum — a legal floor.

The Real Living Wage (set by the Living Wage Foundation) is a voluntary higher rate based on actual living costs. It is not the same as the statutory NLW and should be checked separately each year against the Foundation's current announcement.

Pay Slips and Records

Workers are entitled to:

• An itemised payslip showing their gross pay, all deductions, and net pay
• Evidence that they have received the correct minimum wage rate
• Access to their employment records on reasonable request

If you believe you are being paid below the National Minimum Wage, you can report this anonymously to HMRC's Pay and Work Rights helpline: 0800 917 2368.

Frequently Asked Questions

Q: My employer counts my tips towards the minimum wage — is that allowed? No. Since 1 October 2024, tips cannot be used to top up National Minimum Wage. All tips must be paid to workers on top of the minimum wage.

Q: I'm an apprentice in my second year, aged 21 — which rate applies? The apprentice rate only applies to apprentices under 19, or those in their first year of any apprenticeship regardless of age. In your second year at 21, the National Living Wage (£12.71/hour) applies.

Q: My employer deducts for my uniform — is that legal? Only if the deduction does not reduce your average hourly pay below the National Minimum/Living Wage. If it does, the deduction is unlawful. Employers can recoup uniform costs only from wages above NMW.

Q: I'm on zero-hours — am I entitled to minimum wage? Yes. Zero-hours contract workers are entitled to at least National Living/Minimum Wage for every hour worked. Being on a zero-hours contract does not exempt an employer from paying minimum rates.