On 1 April 2025 the National Minimum Wage for all age groups increased, reflecting the Government’s plan to reform workplace rights and align wages with the cost of living.
The increase forms part of the Government’s plan to create a streamlined adult wage in the future. However employers must currently be alert to the minimum wage rates according to the employee’s age and employment status.
National Minimum Wage 2025 : Key Changes
| Age Group | Previous Rate | New Rate (effective from 1 April 2025) |
| 21 and over (National Living Wage) | £11.44 | £12.21 |
| 18 to 20 | £8.60 | £10.00 |
| 16 to 17 & apprentices | £6.40 | £7.55 |
As estimated by the Government, the increase from £11.44 to £12.21 per hour (for those aged 21 and over) will provide eligible, full-time workers with an extra £1,400 per year. On the other hand, the increase from £8.60 to £10.00 for eligible, full-time workers (aged between 18-20) will be worth an additional £2,500 per year and is the largest increase rate on record for that age group. Furthermore, the increase from £6.40 to £7.55 for 16 and 17 year-olds, in addition to apprentices falling within this age bracket, amounts to a significant 18% pay increase.
Whilst the above wage increases are forecasted to impact many individuals and businesses, it is important to highlight those falling within groups that do not qualify for the National Minimum and Living Wage, such as the self-employed, volunteers and members of the armed forces. These individuals will subsequently not benefit from or be impacted by the changes effective from 1 April 2025.
The Impact on Employers
In addition to the clear increase in costs, the new rates may present employers with other challenges. Such challenges may include:
Reviewing and Calculating Wage Levels
- Ensuring that each staff member is being paid the correct rate can involve a complex calculation, requiring reference to several different factors.
- This can be a common pitfall of employers, who fail to properly implement paid working or travel time, in addition to other factors, as part of the employee’s correct rate and in line with National Minimum and Living Wage requirements.
Impact on Staff Structures and Progression
- The increase in wages will reduce the salary differences between those occupying junior or entry-level roles and any long-standing or higher-skilled employees. The narrowing of wage gaps may ultimately lead to tension amongst team members.
- To mitigate this, an employer may wish to review pay bands and job descriptions to ensure fairness. The pay progression process and any justification of salary differences between staff should also be communicated clearly and in line with company policies.
- For senior roles, if matching wage increases isn’t viable, an employer may wish to consider restructuring awards or other perks to prevent staff demotivation.
Urgent Action for Employers
Given the rise in enforcement action taken by HMRC, employers must be alert to the risk of failing to comply with the National Minimum and Living Wage. These risks include HMRC ordering the repayment of any arrears, in addition to imposing fines of up to a maximum of £20,000 and publicly naming and shaming employers. This poses a significant risk of reputational damage, despite some breaches being accidental in nature.
Therefore, employers must be alert to the increase in wage rates and ensure that workers are paid, at minimum, the specified hourly rate in accordance with their age category and employment status from 1 April 2025 onwards.
Our Services
Our team of employment law experts can assist with ensuring that the increased rates are calculated and implemented correctly, preventing any risk of non-compliance. In the event that we identify any breaches or potential breaches, we will work with you to ensure that these are remedied prior to HMRC enforcing any penalties against you.
We can also advise on reviewing or updating any practices or company policies to bring these in line with the changes. See our Employment Services and Immigration Services website pages for a full list of our services.
If you have concerns about the impact of the National Minimum or Living Wage, or any other employment-related concerns, please do not hesitate to get in touch with our team.
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