National minimum wage and salary sacrifice
As announced in the Autumn Budget, the national minimum wage (NMW) and the national living wage (NLW) are set to increase from April 2025.
The hourly rate will depend on the worker's age and whether they are an apprentice.
| Age of worker | Hourly rate from 1 April 2025 | Hourly rate from 1 April 2024 |
| 21 and over (NLW) | £12.21 | £11.44 |
| 18 to 20 (NMW) | £10.00 | £8.60 |
| Under 18 | £7.55 | £6.40 |
| Apprentice | £7.55 | £6.40 |
The NLW applies to workers aged 21 and over, while workers of school leaving age are entitled to the NMW. The increase for 18–20-year-olds is the largest on record and is the first step towards a single rate for all adults.
Many employers breach the NMW rules inadvertently by making certain deductions from workers that reduce their pay for NMW purposes. Where such deductions take an employee's pay below the NMW, employers must ensure that the worker is not underpaid.
Salary sacrifice schemes are a common cause of underpayment. Even if the employee's hourly rate is above the NMW, if the reduced contractual pay takes it below the NMW, the worker will be underpaid.
If you operate salary sacrifice schemes you need to check that the reduced amount does not take workers' pay below NMW for all time worked in every pay reference period. We can help you with this.
