National Living Wage and National Minimum Wage: What HR needs to know
Eden Scott is a team of recruitment professionals. While the information provided here is accurate to the best of our knowledge, it is intended for general guidance only. To ensure compliance with current and upcoming legislation, employers can consult with an HR or employment law specialist.
As part of the 2024 Autumn Budget, UK Chancellor Rachel Reeves announced a 6.7% increase to the National Living Wage, and a further 16-18% increase to the National Minimum Wage. Here’s everything you need to know about the upcoming updates and what HR teams can do to prepare.
When will the new National Living Wage and National Minimum Wage come into effect?
Increases to the National Living Wage and National Minimum Wage are effective from 1st April 2025.
What is the new National Living Wage?
The National Living Wage is the statutory minimum rate of pay for workers aged 21 and over.The new National Living Wage will rise to £12.21 per hour.
What is the new National Minimum Wage?
The National Minimum Wage is the statutory minimum rate of pay for workers under the age of 21.The new National Minimum Wage is £10.00 per hour for 18 to 20-year-olds and £7.55 per hour for under 18s.
What is the new National Minimum Wage for apprentices?
The new National Minimum Wage for apprentices aged 16 to 18 years old is £7.55 per hour.The same rate applies for apprentices aged 19 and over who are in the first year of their apprenticeship.
Apprentices aged 19 and over who have completed the first year of their apprenticeship are entitled to the relevant statutory minimum rate of pay for their age group - see the table below.
What is the minimum rate of pay for my employee?
From 1st April 2025, employers must pay employees at least the following minimum amounts.| Worker age | New minimum rate of pay (hourly) | Previous minimum rate of pay (hourly) | Increase |
| 21 and older | £12.21 | £11.44 | 6.7% |
| 18 - 20 | £10 | £8.60 | 16% |
| Under 18 | £7.55 | £6.40 | 18% |
| 16 - 18 (apprentice) | £7.55 | £6.40 | 18% |
| 19 and older (apprentice in first year of apprenticeship) | £7.55 | £6.40 | 18% |
| 19 - 20 (apprentice who has completed first year of apprenticeship) | £10 | £8.60 | 16% |
| 21 and older (apprentice who has completed first year of apprenticeship) | £12.21 | £11.44 | 6.7% |
What is the adult wage?
Although it wasn’t announced in the budget, it’s speculated that the Chancellor could introduce an ‘adult wage’ in the near future.This would bring the statutory minimum hourly pay rate for 18 to 20-year-olds in line with the National Living Wage, which is currently only applicable for workers aged 21 and older.
Increase to Employers’ National Insurance Contributions
In addition to increases in the National Living Wage and National Minimum Wage, the Chancellor announced an increase to the rate of Employers’ National Insurance Contributions (NIC).This means employers will need to pay more in NIC on employee earnings. The new rate will come into effect on 1st April 2025.
The new rate of National Insurance is 15% on a worker’s earnings above £5000 a year.
Previously, the rate was 13.8% on a worker’s earnings above £9100 a year.
However, the Chancellor also increased Employment Allowance to £10500 from £5000, meaning many small businesses will either not need to make any NI contributions or will pay the same as they did previously.
New National Living Wage: How HR teams can prepare
With the new rates of National Living Wage and National Minimum Wage coming into effect on 1st April 2025, HR teams don’t have a lot of time to ready their organisations for the change.Here’s how HR teams can prepare, to help make the transition smoother for their companies.
Inform company of the new law
If leaders aren’t already aware of the changes to the National Living Wage and National Minimum Wage, HR teams should inform the relevant person. Let them know of the new rates and when they come into effect.
Conduct a wage audit
Identify all workers that are currently paid the statutory minimum rate of pay. Keep note of the workers aged 18 - 20, as it’s possible that their minimum rate of pay will further increase to match the National Living Wage for workers aged 21 and older.
Update salary bands
Work with leadership and the finance team (or other relevant team) to update salary bands reflecting the new statutory minimum rates of pay. Companies may wish to increase wages across the board to maintain the difference in banded wages - this is at the organisation’s discretion.
Update internal documentation and policies
Check any company literature that lists wages and update these to reflect the new rate of pay.
Communicate the change to workers
Workers will be aware of the new National Living Wage and National Minimum Wage rates, but companies can still communicate upcoming changes to their teams. Let affected team members know of their new hourly rate and when this will start. If updating the wider team’s rate of pay, this can be communicated at the same time.
Update contracts
Update workers’ contracts to reflect their new rate of pay.
Review workforce strategy
Now is a good time to assess your workforce strategy to ensure that each role supports your company’s overall business objectives. You may wish to update job descriptions, refine roles and take on new or permanent or temporary employees.
Read more: Hiring with Eden Scott
Further reading
1 GUIDE: Unfair dismissal changes - Hiring with the future in mind
2 Zero hours contracts UK: What employers need to know
3 An end to ‘fire and rehire’: What employers need to know
4 Employment Rights Act 2024-25: Are you compliant?
