National Minimum Wage and statutory pay increases from April 2026

Each April, the National Minimum Wage (NMW) and National Living Wage (NLW) increase. From 1 April 2026, employers across England and Wales will be required to implement a series of statutory pay increases affecting the National Minimum Wage, the National Living Wage, statutory sick pay and statutory family leave payments. These changes carry significant compliance, payroll and cost implications for businesses of all sizes.

The new rates at a glance

The government has confirmed that the following NMW and NLW rates will apply from 1 April 2026:

• Workers aged 21 and over (NLW): £12.71 per hour (up from £12.21) — a 4.1% increase
• Workers aged 18 to 20: £10.85 per hour (up from £10) — an 8.5% increase
• Workers aged 16 to 17 and apprentices: £8 per hour (up from £7.55) — a 6% increase
• Accommodation offset: £11.10 per day (up from £10.66) — a 4.1% increase.

The Low Pay Commission’s recommendations for the NLW, NMW and accommodation offset were accepted in full, ensuring that the NLW rate does not fall below two-thirds of median earnings for workers.

The Low Pay Commission’s recommendation letter of October 2025 set out the justification for the proportionally larger increase for 18- to 20-year-olds, stating:

“For 16-17 year olds we recommend an increase of 6 per cent (45 pence) to £8.00 per hour. This recommendation balances the weaker labour market for this age group with the need to ensure their rate does not become unmoored from the adult rate, particularly as Government policy is to remove the 18-20 Year Old Rate entirely, thus creating a larger gap with this rate.”

Additional changes

Further changes will take effect from 6 April 2026:

• Statutory sick pay (SSP): increases from £118.75 to £123.25 per week, alongside the removal of the lower earnings limit
• Statutory family leave payments (including statutory maternity, paternity, adoption, shared parental, parental bereavement and neonatal care pay): increase from £187.18 to £194.32 per week for periods where the minimum cap applies
• Lower earnings limit: increases from £125 to £129 per week (£6,708 per year).

Employers should note that the NMW and NLW changes take effect on 1 April, while the statutory payment and threshold changes outlined above come into force on 6 April. These differing implementation dates should be reflected in payroll processing.

Compliance requirements and enforcement risks

There are no exceptions to the legal obligation on employers to pay at least the applicable NMW or NLW to those entitled to it. Failure to do so can expose employers to penalties of up to 200% of the total underpayment for all workers identified in a notice of underpayment (NOU), capped at £20,000 per worker.

In the most serious cases, HMRC has the power to pursue labour market enforcement orders and, in extreme cases, criminal prosecution. This can carry a custodial penalty of up to two years.

Practical challenges for employers

Several areas merit particular attention from HR and employment law professionals:

Salaried workers and pay period calculations

A common cause of accidental underpayment is a failure to calculate hourly rates correctly for salaried staff. HMRC assesses compliance on a pay-period basis, not annually. As a result, employers can’t rely solely on an employee’s annual salary appearing to exceed the NMW threshold.

Deductions, salary sacrifice arrangements and unpaid working time remain leading causes of underpayment identified by HMRC. Employers must also exercise caution and recalculate pay where employees move from NMW to NLW entitlement.

Workers on variable hours

Employers with staff on zero-hours contracts, variable-hours arrangements or irregular shift patterns must ensure that the new rates are correctly applied from the first pay reference period beginning on or after 1 April 2026.

Accommodation offset

Employers providing accommodation to workers — common in sectors such as agriculture, hospitality and social care — must ensure the new daily offset rate of £11.10 is applied correctly.

Recommended next steps

Employment law and HR professionals should consider taking the following steps ahead of April 2026:

1. Audit current pay rates across all worker categories to identify anyone at risk of falling below the applicable NMW or NLW and adjust their pay accordingly
2. Update payroll systems to reflect both sets of changes, ensuring the correct effective dates are applied
3. Review salary sacrifice and deduction arrangements to ensure no worker’s effective hourly rate falls below the statutory minimum
4. Reassess absence cost modelling in light of expanded SSP eligibility and increased statutory pay rates
5. Review contracts with agencies and suppliers to confirm that third-party providers are also compliant with the new rates.

The April 2026 increases are not simply an incremental uplift. Introduced alongside broader reforms under the Employment Rights Act 2025, they represent a significant shift in the cost and compliance landscape for employers. Proactive preparation will help reduce the risk of underpayment, enforcement action and reputational harm.