From 1 April 2025, changes to the National Minimum Wage (NMW) and National Living Wage (NLW) came into effect – and businesses must act quickly to remain compliant.
What are the new wage rates?
The most significant update is that the NLW has increased from £11.44 to £12.21 per hour.
Younger age bands have also seen notable increases:
- Those aged 18 to 20 must now be paid £10.00 per hour (up from £8.60)
- Workers aged 16 to 17 and apprentices in their first year (or aged under 19) must earn a minimum of £7.55 per hour (previously £6.40)
If an apprentice is aged 19 or over and has completed the first year of their apprenticeship, they are entitled to the NMW for their age group.
Compliance is not optional
Every employer, regardless of size or sector, is legally obliged to pay the correct wage.
Failing to do so can result in:
- Repayment of all underpaid wages
- Fines of up to 200 per cent of arrears (capped at £20,000 per employee)
- Possible public naming by the Government
- Legal action or unannounced inspections by HM Revenue & Customs (HMRC)
Are your payroll systems keeping pace?
To stay on the right side of the law, make sure all employees are paid according to actual hours worked during their pay reference period.
This includes overtime and variable hours.
High-risk areas to monitor:
- Employees moving into new wage bands due to age
- Apprentices progressing beyond their first year
- Commission or piece-rate workers
- Wage deductions that may bring pay below legal levels
You can use HMRC’s online wage calculator to check that your current pay rates comply.
What records must you keep?
To prove compliance, you must maintain clear payroll records. These should show:
- Gross pay and deductions
- Total hours worked
- Employment contracts
- Justifications for any exemptions
For records dated on or after 1 April 2021, you are required to keep them for at least six years.
Whether you store them digitally or on paper, they must be easy to access and understand.
Avoid penalties – act now
If you are uncertain whether your payroll meets the new minimum wage standards, our team can carry out a full compliance review.
We can help you identify any risks and take action to ensure your business meets all legal requirements.