The Chancellor of the Exchequer Rachel Reeves has announced on the day before her 26th November 2025 Autumn Budget the acceptance of the Low Pay Commission recommendations on increases to the National Minimum Wage and National Living Wage.
These uplifts are predicted in benefit 2.7 million U.K. workers with a significant increase in pay.
What about the predicted age reduction for National Living Wage
As part of the governments early days announcements, they desire to reduce the qualifying age for National Living Wage to commence at 18 years of age. However, instead of reducing the NLW effective age, the increase to the 18-20 year olds is the highest increase at +8.5% to the new £10.85 per hour rate.
What about the younger workers and apprentices?
Those aged 16-17 who have reached school leaving age and apprentices also received a higher increase of 6% to the new £8 per worked hour rate as a statutory minimum.
Is there a risk to Salary Sacrifice based benefits
It is potentially criminal for an employer to pay their workers under their age related National Minimum Wage rate for all work hours.
Salary Sacrifice arrangements, no matter the tax and NI relief status, contractually reduce earnings for NMW purposes and can result in, what could be stated, criminal breach of minimum pay regulations.
For pay reference periods commencing on or after 1st April 2026, employers may need to instigate a contract review with their employees to access whether contractual terms of the salary sacrifice needs to change.
Why isn’t minimum wage simple? After all it’s just an hourly pay rate!
National Minimum Wage regulations is particularly complex. there are different rules for different types of workers, and even the assumed status type may prove difficult to confirm with some contract term and workplace behaviours.
These types can differ between: annualised hours, time workers who are measured, those unmeasured and piece rate workers. The rules are complex.
Then there are many workplace employment practices that may prove to be incompatible. Historically Time and Attendance practices such as 15 minute round downs and deductions for the benefit of the employer may confirm to many employers that minimum pay is not the hourly pay rate, but relates to an averaged payment received over all worked time.
And then there is confusion on what pay counts, and although there may at times be some alignment with taxable income, it isn’t the case except by coincidence. Some taxable and NIable payments simply are not earnings for NMW purposes.
Naming and shaming frequency increase!
It is being indicated that the government intends to increase the policing of minimum pay with more action activity and more frequent naming and shaming rounds. So far during 2025 around 1,000 employers have been caught and fined for breaching minimum pay regulations, having been found to owe their employees additional minimum earnings.
Fair Work Agency (FWA)
With the progress and introduction of the Fair Work Agency headed by Matthew Taylor, enforcement of basic employment rights to minimum pay, paid holiday and rights to sickness are being pursued.
New powers are being excellerated to progress broader enforcement of employers to ensure that these employment rates are being adhered to.
PAYadvice.UK 25/11/2025