The UK Government is advised each year by the LPC (Low Pay Commission) on the level of the NLW and NMW each year.
In 2023, it recommended to raise the National Living Wage to reach two thirds of median earnings by 2024. The recommendation was taken on board by the Chancellor in the Autumn Statement in November 2023, and the NLW will increase to £11.44 from April 2024.
From this year, all workers over the age of 21 will also be able to receive the NLW.
Living Wage vs. Minimum Wage – what’s the difference?
The NLW rate is the minimum hourly rate that must by law be paid to all employees and workers over the age of 23 years.
The NLW rate applicable from 1 April 2024 to 31 March 2025 is £11.44.
Minimum wage rates applicable from 1 April 2024 are:
| 21 years and over | 18-20 years old | Under 18s | Apprentice |
|---|---|---|---|
| £11.44 | £8.60 | £6.40 | £6.40 |
Apprentices are entitled to the apprentice rate if they are either:
- aged under 19
- aged 19 or over and in the first year of apprenticeship
How can I check I’m paying the correct rate?
As an employer you need to be aware that NLW and NMW rates increased on 1 April 2024. You should ensure that workers are paid correctly according to the new rates.
Even if you are paying your workers at or above the National Living Wage or National Minimum Wage, you could still be underpaying them. This can easily happen when an employer makes wage deductions or doesn’t pay for all time worked.
Take these simple steps to meet your legal responsibilities and avoid falling foul of the law:
- You can check the new rates on the government’s website at: GOV.UK | Check your pay
- Identify which staff are eligible for the new rate.
- Update the company payroll and communicate the changes to staff as soon as possible.
- Call the Acas helpline on 0300 123 1100 for advice and support to understand what you need to do to pay workers correctly. NFU members can also contact NFU Callfirst on 0370 845 8458 for employment advice.
Accommodation offset
There is a maximum rate an employer can charge a worker for accommodation while still ensuring compliance with the National Minimum Wage and the National Living Wage. It is designed to protect workers who are the lowest earners.
No other benefits count towards the minimum wage (e.g. childcare vouchers, a company car, or food).
The rate from April 2024 is £9.99 per day.
The level set bears no relationship to market rates for accommodation.
If the employer includes charges to the worker’s wages for factors such as gas, electricity or laundry, that amount must be included in the daily rate. If the worker is responsible for paying the utility companies directly, the accommodation offset rules do not apply to those bills.
In order for accommodation offset to apply, the accommodation must meet two conditions:
- Be provided by the employer and this includes being let by the employer or a third party.
- Be ‘living accommodation’. This means the worker must be able to live an ‘independent domestic life’ with access to and free use of a toilet, bed and washing facilities. The facilities can be shared with other occupiers.
Penalties of underpayment of NMW/NLW can be at 200% of the underpayment and between £100 minimum up to a maximum of £20,000 penalty notice per worker. There is also the possibility of criminal sanctions, ‘name and shame’ and/or a claim at the Employment Tribunal.
Workers in England must be paid at least the NMW/NLW. Agricultural workers employed before 1 October 2013 still have the right to the Agricultural Wages Order 2012 which contains different rules on accommodation offset.
In Wales, the Agricultural Wages (Wales) Order 2024 sets the accommodation offset rates and a distinction is made between accommodation provided for the better performance of duties and other accommodation.
Agricultural Wages Order
Additionally, The Agricultural Wages (Wales) Order 2024 came into force on 1 April 2024. It replaces the Agricultural Wages (Wales) Order 2023 and increases the minimum wage rates and allowances.
The new increased rates apply to all categories of agricultural workers and includes pay protection for any worker who may lose out as a result of earlier changes to the grading structure. Full details of the minimum rates of pay can be found on the Welsh government’s website.
It is also important to remember that Agricultural Workers in England who were employed prior to 1 October 2013 will still benefit from the enhanced provisions contained within the Agricultural Wages Order 2012 if they are more generous that the NMW and unless they have subsequently agreed new terms and conditions.
What will the National Living Wage be in 2025?
On 29 October, the government confirmed the NLW rates for 2025:
| NLW rate | £ increase | % increase | |
|---|---|---|---|
| NLW for workers aged 21 and over | £12.21 | £0.77 | 6.7% |
| Rate for workers aged 18-20 | £10.00 | £1.40 | 16.3% |
| Rate for workers aged 16-17 | £7.55 | £1.15 | 18% |
| Apprentice rate | £7.55 | £1.15 | 18% |
| Accommodation offset | £10.66 | £0.67 | 6.7% |
Inflation
The increase in the 2025 NLW rate is above current wage growth. Wage inflation up to July 2024 is currently at 5.1%.
LPC projection
The LPC (Low Pay Commission) is an independent body that advises the government on the level of the minimum wage. Earlier this year, the government issued a fresh remit instructing the LPC to:
- Recommend a NLW rate that does not drop below two-thirds of median earnings that considers:
- the impact on business, competitiveness, the labour market and the wider economy
- the cost of living.
- Recommend a rate for 18-20 year olds taking into account an ambition to narrow the gap with the NLW taking steps year by year in order to achieve a single adult rate applied to all workers over 18 years of age.
The LPC estimated that a NLW increase in April 2025 should fall into a band ranging from £11.82 to £12.39, with a central estimate of £12.10, to maintain the ‘bite’ (the ratio of the NLW to median hourly pay) at two-thirds of median hourly earnings.
The official increase to £12.21 is above this estimate, but still within the overall band.
For the latest information, visit: GOV.UK | National Living Wage to increase to £12.21 in April 2025.
More from NFUonline:
National Living Wage 2025 – LPC publishes new projection
