How much will the National Minimum Wage and National Living Wage rise by?
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In April 2025, more than three and a half million low-income workers will see a larger-than-anticipated boost in their wages.
The government has announced that the National Living Wage for individuals over 21 will rise by 6.7%. Meanwhile, the National Minimum Wage for those aged 18 to 20 will jump by 16%.
Additionally, nearly 500,000 employees are receiving a higher hourly wage known as the Real Living Wage, which some UK companies choose to pay voluntarily. This wage is set to increase as well.
What Is The National Living Wage And Its Rate?
As of April 1, workers who are 21 years old and above can now receive the National Living Wage. Before this change, the qualifying age was set at 23.
At the moment, the hourly wage stands at £11.44, but it is set to rise to £12.21 in April 2025.
Every year, the government determines the wage rates based on recommendations from an independent organization known as the Low Pay Commission.
It suggested that the National Living Wage be set at £12.10 starting in April 2025, reflecting an increase of 5.8%.
Nevertheless, the government has declared that the rate will rise by 6.7%.
Understanding The National Minimum Wage: Amount & Details
Employees who are younger, specifically those between the ages of 16 and 20, who are not part of the company, earn the National Minimum Wage.
The National Minimum Wage for young people aged 18 to 20 is currently £8.60, but it will increase to £10 per hour starting in April 2025.
This is the highest increase ever documented, marking an initial move toward achieving the government's goal of establishing a uniform rate for all adults.
For teenagers aged 16 and 17, the National Minimum Wage stands at £6.40 per hour. The government has yet to announce what this rate will be starting in April 2025.
The distinct apprentice wage, which is available to qualified individuals under 19 years old – or those over 19 who are in their first year of an apprenticeship – will increase from £6.40 to £7.55, marking an 18% rise.
Who Is Ineligible For Minimum Wage?
Individuals who are not eligible consist of:
military personnel
individuals residing and employed within a spiritual community
Individuals with disabilities or those who have been unemployed for an extended period and participate in government employment programs receive set payments at various points throughout the program.
These rates are below the National Minimum or Living Wage standards.
"Must Employers Pay Minimum And Living Wage?"
Absolutely, it's illegal for employers not to pay their employees the proper National Minimum and Living Wages.
The rates are applicable to employees regardless of whether they are paid on an hourly basis.
If you believe you are not receiving the correct pay, you can file a complaint through the HMRC website.
You can also seek guidance from workplace specialists at Acas or other external resources.
Consequences Of Underpaying Minimum Wage
Any employer who fails to pay the appropriate amount may face penalties from HMRC.
In June 2023, the former government announced that over 200 companies had been penalized, collectively paying close to £7 million in fines. Additionally, they were instructed to compensate 63,000 employees for issues that had occurred over multiple years.
The businesses featured were Marks and Spencer, Argos, and Lloyds Pharmacy.
WH Smith was the biggest culprit, not paying over £1 million to more than 17,600 employees.
What Is The Real Living Wage And Its Amount?
The Real Living Wage, as defined by an external organization, is a non-official hourly wage managed by the Living Wage Foundation charity.
The rate is determined independently by the Resolution Foundation, which is a think tank, and is monitored by the Living Wage Commission.
The program targets employees in the UK who are 18 years old and above. However, participation is voluntary, and companies have the option to decide if they want to provide this payment.
The charity reports that over 475,000 workers at 15,000 companies are being paid the Real Living Wage.
The pay for employees in London, known as the London Living Wage, will increase by 70 pence, bringing it to £13.85 per hour.
In the remaining parts of the UK, the rate will rise by 60p, bringing it to £12.60.
Employers are required to put the new rates into effect by May 1, 2025.
Photo credit: Getty Images
In their announcement about the updated pay rates, the charity highlighted that the Real Living Wage is now more than £2,262 higher annually in the UK compared to the legal minimum wage, and it's over £4,700 extra in London.
According to the report, the program has provided almost £3.5 billion in additional earnings for low-income workers since 2011.
Introduction Of Minimum And Living Wage Dates
The National Minimum Wage was introduced by the Labour government in 1999.
Initially, the pay was set at £3.60 per hour for individuals aged 22 and above, while for those between 18 and 21, the rate was £3 per hour.
In October 2004, a new minimum wage was established for individuals aged 16 to 17, while the apprentice wage was launched in October 2010.
The National Living Wage for individuals over 25 was introduced in 2016.
Originally, it was established at £7.20 per hour, which is 50p higher than the National Minimum Wage. In 2021, the eligible age dropped to 23.
