The UK Government has confirmed new National Living Wage (NLW) and National Minimum Wage (NMW) rates that take effect on 27 October 2025. The revision is designed to protect lower-paid workers from inflation while supporting fair pay across sectors such as retail, hospitality, social care, logistics, and facilities services. These changes apply to most people who work in the UK, whether full-time, part-time, casual, or agency staff. Employers must update payroll immediately for any shifts worked on or after the effective date, and workers should check payslips to ensure the correct rate is being applied.
Table of Contents
This guide explains the new hourly rates, who is covered, how compliance works, common pitfalls that lead to underpayment, and practical steps to secure back pay if you have been paid below the legal minimum.
UK Minimum Wage Update Short Summary Table
Item |
Details |
|---|---|
Effective date |
27 October 2025 |
National Living Wage (23+) |
£12.50 per hour |
Age 21–22 |
£11.00 per hour |
Age 18–20 |
£9.50 per hour |
Under 18 |
£7.50 per hour |
Apprentice rate |
£6.80 per hour |
Coverage |
Most workers in the UK, including part-time, casual, and agency |
Enforcement |
HMRC can order back pay and issue penalties |
What you should do now |
Employers: update payroll and contracts. Workers: check payslips after 27 October 2025 |
Official site |
Why the Minimum Wage Is Increasing
Each year the Government reviews pay floors with advice from the Low Pay Commission (LPC). The 2025 uplift reflects:
- Pressures on household budgets from inflation and living costs.
- A policy push to support fair pay across low-wage sectors.
- The need to limit erosion of earnings and reduce reliance on in-work benefits.
The increases are roughly 5–6% over the previous year’s rates and are intended to lift take-home pay without materially undermining employment levels. Employers should plan for the cost impact through budgeting, pricing, and productivity improvements.
The New Legal Rates From 27 October 2025
- National Living Wage (23 and over): £12.50 per hour
- 21–22 years: £11.00 per hour
- 18–20 years: £9.50 per hour
- Under 18: £7.50 per hour
- Apprentice rate: £6.80 per hour
These are minimum legal floors. Employers may pay more but must not pay less. The correct rate depends on your age and status on the day the work is done. If you have a birthday or move from apprentice to non-apprentice during the pay period, your rate should increase from the date you become eligible.
Who Is Covered
The NLW/NMW applies to most people who are:
- Aged 16 or over (with age-banded rates).
- Working in the UK or for a UK-based organisation.
- Employees or workers (including part-time, casual, zero-hours, and agency staff).
Not covered: the self-employed (who set their own rates by contract), volunteers, and genuinely unpaid interns. Students on paid placements and paid trainees are typically entitled to the relevant age or apprentice rate.
Apprentices and Young Workers: How It Works
- The apprentice rate applies during the first year of an approved apprenticeship or if the apprentice is under 19.
- After the first year, apprentices aged 19 or over should be paid at least the relevant age-banded NMW/NLW.
- Employers must keep accurate records of apprenticeship status, start dates, and training standards.
Payroll Compliance: What Employers Must Do Now
- Update payroll software and rates for shifts worked on or after 27 October 2025.
- Audit pay bands for age changes and apprentices moving into age rates.
- Check deductions: do not let deductions for items such as uniforms, till shortfalls, or certain transport costs drive pay below the minimum.
- Review salaried hours: ensure annualised salaries divided by contracted hours still meet the minimum in each pay reference period.
- Provide clear payslips showing hours, rates, and gross pay.
- Train managers on scheduling, breaks, and rules around unpaid working time (induction tasks, handovers, security checks) that may count as working time.
Penalties for non-compliance can include back pay orders, fines, and being publicly named by HMRC.
Common Causes of Underpayment
- Uniform or equipment deductions leaving net pay below the legal floor.
- Unpaid working time at the beginning or end of shifts (e.g., setting up tills, security checks).
- Training time paid below the minimum rate.
- Incorrect age band after a birthday or apprenticeship milestone.
- Salary averaging that ignores actual hours worked in the pay period.
How Workers Can Check and Claim Back Pay
- Check your payslip after 27 October 2025 to confirm your correct hourly rate.
- Calculate your effective hourly pay for the pay reference period (gross pay minus certain permitted deductions, divided by hours that count as working time).
- Raise the issue with your employer in writing; request correction and back pay.
- If unresolved, report to HMRC via GOV.UK for a confidential investigation.
- Keep records: contracts, rota screenshots, messages, clock-in data, and payslips.
Sector Notes: Hospitality, Retail, Social Care, Logistics
- Hospitality and retail: watch for uniform policies and paid/unpaid prep time. Tips and tronc arrangements do not count towards NMW/NLW.
- Social care: ensure sleep-in shifts, travel time between visits, and training are paid in line with the minimum where they count as working time.
- Logistics/warehousing: paid time must include security checks, handovers, and mandatory briefings where required by the job.
Worked Example
A 22-year-old retail assistant works 35 hours in the week beginning 27 October 2025.
- Correct rate: £11.00 (21–22 band).
- Gross pay due: 35 Ă— £11.00 = £385.00.
- If the employer deducts £40 for uniform purchase that week, the effective pay is £345.00, or £9.86 per hour, below £11.00.
- The employer must reimburse the shortfall for that pay period and adjust policy to avoid repeat breaches.
Economic and Workplace Effects
Potential benefits
- Higher take-home pay for millions of workers.
- Improved staff retention and lower turnover in low-pay sectors.
- More consumer spending supporting local economies.
Possible challenges
- Margin pressure for small businesses.
- Need for productivity gains and smarter scheduling.
- Pricing decisions to balance payroll costs with demand.
Frequently Asked Questions
1) Do I need to ask my employer to apply the new rate?
No. Employers must automatically pay the correct legal rate from 27 October 2025.
2) I had a birthday after 27 October 2025. When does my rate change?
Your new age-band rate applies from the date of your birthday for hours worked on or after that day.
3) I am an apprentice in my second year and I am 19. Which rate applies?
You should be paid at least the age-related NMW/NLW (no longer the apprentice rate).
4) Can deductions for uniforms or tools reduce my pay below the minimum?
No. If required for the job, these deductions cannot push your pay below the legal minimum for the pay period.
5) What if my employer says service charge or tips count towards minimum wage?
Tips, gratuities, and service charges do not count towards meeting NMW/NLW.
6) How do I report an underpayment?
Use the GOV.UK reporting service to contact HMRC. You can remain confidential.
7) I am on a salary. Can I still be underpaid?
Yes. Your salary must still equate to at least the NMW/NLW for the hours you actually work in each pay reference period.
8) Are zero-hours and agency workers covered?
Yes. If you are a worker and not genuinely self-employed, you are typically covered.
9) Are interns covered?
Genuinely unpaid interns are not, but paid internships usually attract the relevant NMW/NLW.
10) Where can I find official guidance and calculators?
On GOV.UK, including tools to check your rate and work out arrears.
For More Information Click HERE
