In the most recent budget, the government has announced increases to the National Minimum Wage to be implemented in April 2025.
Following recommendations from the Low Pay Commission (LPC), the government has announced the following changes to the National Minimum Wage (NMW) that will be in place from 1 April 2025:
- National Living Wage (NLW) (21 and over): £12.21 (6.7% increase).
- 18-20 year old rate: £10.00 (16.3% increase).
- 16-17 year old rate: £7.55 (18% increase).
- Apprentice rate: £7.55 (18% increase).
- Accommodation offset: £10.66 (6.7% increase).
Earlier this year the LPC, an independent body that advises the government on NMW, carried out its yearly consultation to obtain evidence to help them consider the impact of changes to NMW on both business and workers.
However, on 30 July 2024 the government issued a new remit for the LPC so that the NMW increase for 2025 will take into account the cost of living and expected inflation up to March 2026. In response a policy paper was published by the LPC setting out its recommendations in line with the enhanced remit. Its recommendations included: (i) reducing the disparity between youth NMW rates and adult rates; and (ii) that the NLW rate is expected to equal two-thirds of median earnings.
The government has accepted the LPC’s recommendations. The changes announced will mean that over 3 million workers receiving the NLW will see their rate of pay increased by 6.7%, which is £1,400 a year for an eligible full-time worker. There is also a substantial 16.3% increase in the NMW for 18-20 year olds, which is £2,500 for an eligible full-time worker. This is in line with the government’s intention of extending entitlement to the NLW to all workers aged 18+. The LPC has stated that progress towards this goal can be made without harming the labour market, although it intends for the existing age of eligibility for the NLW (21) to remain until at least April 2026.
Article contributor, Thelma Brako, Trainee solicitor
