Frequently Asked Questions
What is the National Living Wage for 2026?The NLW from April 2025 is £12.21 per hour for workers aged 21 and over. Note: the 'Living Wage Foundation' Real Living Wage (£12.60 outside London) is a separate voluntary higher rate.
What counts as pay for NMW purposes?Basic pay, piece rates, output wages. Deductions for uniforms, tools, or accommodation (above £9.99/week) reduce effective NMW pay. Overtime and shift premiums count. Tips do NOT count towards NMW.
What are the penalties for NMW underpayment?Employers must repay all arrears PLUS a penalty of 200% of arrears (minimum £100, maximum £20,000 per worker). Persistent offenders may be named publicly by HMRC.
Does the NMW apply to self-employed workers?No — NMW applies only to workers and employees, not genuine self-employed. However, HMRC and employment tribunals often reclassify workers as employees or workers for NMW purposes.
What is the difference between NLW and NMW?National Living Wage (NLW) is the term used for the rate applying to workers aged 21+. National Minimum Wage (NMW) covers under-21s and apprentices. Both are legally enforceable minimum rates.
When do NMW rates change?NMW rates are reviewed annually by the Low Pay Commission and usually change on 1 April each year. Employers must update payroll to the new rates from that date.
Do unpaid interns get NMW?If an intern is classed as a 'worker' (performing work under a contract), they are entitled to NMW. Voluntary positions, school/college placements, and genuine shadow/observation work may be exempt. The distinction is whether actual work is performed.
Does the NMW apply to salary sacrifice schemes?If a salary sacrifice arrangement reduces effective hourly pay below the NMW, the employer must top up pay to the NMW rate. NMW is a floor that cannot be contracted out of.
Are family members employed in a family business entitled to NMW?Usually yes — if there is a contract of employment and the worker is genuinely working, NMW applies. An exception exists for family members who live in the family home as part of the employer's household.
What is 'output work' for NMW?Piece-rate or output-based pay where workers are paid per item produced or task completed. Output workers must still be paid at least the NMW — employers must set a 'fair rate' output price to ensure this.
Can tips top up NMW?No. Cash tips paid voluntarily by customers, and service charges passed to workers via tronc, do not count towards NMW. Basic pay before tips must meet NMW.
What is the accommodation offset for NMW?Employers providing accommodation can reduce NMW pay by an accommodation offset of £9.99 per day (2025/26). Deductions above this amount would breach NMW. This helps live-in care workers and hospitality staff.