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Understanding how the Minimum Wage works in the UK is really important, particularly when the terminology around it can be confusing.
Here’s our guide to help you understand the difference between the National Minimum Wage, the National Living Wage and the Real Living Wage.
How much is the National Minimum Wage?
The National Minimum Wage refers to the minimum pay per hour that almost all workers in the UK are entitled to, no matter how big or small their employer.
Full-time, part-time and contract workers (both zero-hour and otherwise) are all entitled to the minimum wage. Read our article What is a zero-hours contract and what are my rights? to understand your rights as a zero-hour contract worker.
These rates vary between different age groups, and they change on April 1st every year.
The current rates for the minimum wage per hour in the 2023/24 year are:
| Apprentice | Under 18 | 18 to 20 | 21 to 22 | 23 and over |
| £5.28 | £5.28 | £7.49 | £10.18 | £10.42 |
While the minimum wage is expressed as an hourly rate, you’re still entitled to this amount even if you are not paid by the hour.
Your employer is not allowed to count tips or service charges as part of your minimum wage, but they can count bonuses.
If you’ve made any payments for work purposes yourself, your employer needs to deduct these before checking that you’ve been paid the minimum wage. These may include, for example, paying for work equipment such as uniforms or tools, or other payments that are specifically for work purposes, such as travel between sites. In other words, these payments can’t take a chunk out of your minimum wage, and it’s your employer’s job to compensate you for them.
Payments such as tax and National Insurance are not deducted before checking that you are receiving the minimum wage, so these will still come out of your income.
If your workplace offers a salary sacrifice scheme, then making use of this is not allowed to take you below the minimum wage, no matter what the benefits are. Read more about how this works in our article What is salary sacrifice?
Is the National Minimum Wage the same as the National Living Wage?
The National Living Wage simply refers to the highest rate of the National Minimum Wage, which everyone aged 23 and over is entitled to. In 2023/24, this stands at £10.42 an hour.
Essentially, this means that if you’re aged 23 or over, the minimum wage and living wage are the same thing. The National Living Wage is simply a name used to distinguish the rate received at this stage of life because many people start to live independently around this age.
Is the Real Living Wage the same as the National Living Wage?
The National Living Wage is set by the government. However, the Living Wage (also known as the Real Living Wage) is a different rate calculated by the Living Wage Foundation, an independent body that encourages employers to adopt slightly higher rates to compensate for rising living costs.
The Real Living Wage, as calculated by the Living Wage Foundation, is currently £10.90 an hour. This rises to £11.95 in London, where the cost of living is considerably higher, a distinction that the government rates do not make.
Over 12,000 companies in the UK have voluntarily adopted the Real Living Wage for their employees. You can read more about it on their website.
Are there exceptions to the National Minimum Wage?
The only circumstances in which you are not entitled to the National Minimum Wage are if you’re self-employed or the director of a company. This is because you are in charge of your own salary, and set the amount you withdraw from your earnings yourself.
What can you do if you think you’ve been paid less than the Minimum Wage?
If you think your employer is paying you less than you’re legally entitled to, start by talking to them directly. It may help to have contracts and payslips handy as evidence.
If this does not resolve the issue, you can report your employer to HMRC and they can force your employer to pay you what you are owed. The form to make a complaint to HMRC about pay and work rights can be found on GOV.uk.
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