National Minimum Wage: What Employers Need to Know for April 2026
Posted on March 2, 2026
Minimum wage compliance continues to be one of the most common (and avoidable) areas of HR risk. With updated rates, expanding enforcement powers and ongoing “naming and shaming” activity, employers cannot afford to treat this as an admin exercise.
Here’s what matters most right now.
New Rates from April 2026
In November 2025, the Government announced that it had accepted the Low Pay Commission’s (LPC) recommended rates of NMW and NLW, applicable from 1 April 2026. The new hourly rates will be:
| 2025–2026 | 2026–2027 | Increase | |
| NLW 21+ | £12.21 | £12.71 | 4.1% |
| NMW 18–20-year-old rate | £10 | £10.85 | 8.5% |
| NMW 16–17-year-old rate | £7.55 | £8 | 6% |
| NMW apprentice rate | £7.55 | £8 | 6% |
| Accommodation offset | £10.66 | £11.10 | 4.1% |
These rates reflect government plans to align the NMW and NLW to create a single adult wage rate, which the is intended to take place over time.
The Biggest Compliance Risks (And Why Employers Get Caught Out)
Underpayment is rarely deliberate. It’s usually caused by operational oversights such as:
- Failing to uplift pay after birthdays or April increases
- Not paying for all working time (training, travel between clients, mandatory meetings)
- Incorrect deductions (uniforms, equipment, meals)
- Salary sacrifice arrangements reducing pay below NMW
- Misapplying the apprentice rate
- Accommodation charges exceeding the permitted offset
NMW is calculated based on average hourly pay within the pay reference period, not just the headline hourly rate
Even small deductions can tip someone below the threshold.
Calculating Whether NMW is Paid
NMW is calculated by determining the worker’s total remuneration in a pay reference period and checking that the average hourly rate of pay for that period is at least the relevant minimum wage rate. Therefore, to calculate whether NMW or NLW is paid, the worker’s average hourly pay will need to be determined. To determine the average hourly pay, the worker’s total amount of pay received over the pay reference period is divided by the total number of hours worked by the worker in the same pay reference period.
Importantly, there is no requirement to pay the worker the NMW for each hour worked so long as the average hourly pay meets the NMW.
It is important to take into account all hours a worker works when calculating NMW.
Calculating Pay
Employers should use gross pay to determine whether they comply with the NMW legislation. Most financial rewards (including incentives, piecework payments, sales commission and performance-related pay awards) count towards the calculation of pay for entitlement to the NMW.
However, some things, such as non-consolidated regional allowances, unsocial hours payments, on-call allowances, additional premiums for working overtime or shifts, and tips and gratuities do not count. Similarly, benefits in kind: uniforms, meals and travel, for example, are outside the NMW equation, although employer-provided accommodation may be counted.
Expenses paid for an employee to travel to a temporary workplace do not count as part of an employee’s pay for NMW.
Reference Period
Wages can be averaged over a reference period to establish whether the NMW has been paid. This means that workers need not necessarily be paid the NMW for each individual hour they have worked, but they must receive the minimum rate as an average over the period concerned.
The pay reference period is the actual pay period, such as one day or one week. A maximum reference period of one calendar month applies, irrespective of whether a worker is paid at less frequent intervals, eg every three months.
Normally, annual bonuses count towards the NMW calculation only in the pay reference period in which any bonus payment is made. However, where the pay reference period is one month, 1/12th of the bonus payment can go towards the NMW calculation for the previous month, with the rest attributed to the month in which the award is payable.
Enforcement Is Increasing
The Employment Rights Act 2025 will introduce a new Fair Work Agency from April 2026, consolidating enforcement powers and strengthening recovery of underpayments. Penalties can reach 200% of arrears owed, capped at £20,000 per worker On top of that, naming and shaming continues and it includes employers who made genuine administrative errors.
This is no longer just a payroll issue. It’s a reputational risk.
Real Living Wage vs National Living Wage
The statutory NLW (set by Government) is different from the voluntary Real Living Wage, which is based on cost-of-living calculations and applies to workers aged 18+
For 2025–2026, the Real Living Wage rates are:
- £14.80 (London)
- £13.45 (Rest of UK)
While voluntary, over 16,000 UK employers are accredited. For some businesses, it’s a recruitment and brand positioning strategy rather than just a compliance decision.
Practical Actions for Employers
To reduce risk:
- Audit pay rates ahead of April uplifts
- Review birthday tracking processes
- Check deductions linked to uniforms, equipment and training
- Reassess salary sacrifice eligibility for lower-paid staff
- Ensure travel time and mandatory training are paid correctly
- Review apprentice classifications
- Review hours calculations and pay reference period
If you haven’t conducted a minimum wage audit in the last 12 months, now is the time.
Final Thought
Minimum wage compliance isn’t about paying the bare minimum. It’s about paying correctly. With enforcement tightening and reforms underway, proactive review is significantly cheaper than reactive correction.
If you’d like support reviewing your pay practices or conducting a compliance audit, SME HR Consultancy can help.
