Behind every minimum wage rise are real people: the carer picking up extra shifts, the 19-year-old in their first job, the supervisor wondering whether their pay still reflects their experience.
In the 28 October Budget, the Chancellor confirmed that the National Living Wage will rise to £13.21 an hour from 1 April 2027. Every minimum wage band goes up by 3.9%, and for the first time since 2023, younger workers’ rates won’t rise faster than the adult rate.
Here’s what’s changing, where employers most often get caught out, and what to do between now and April.
The new rates
| Age band | Now | From 1 April 2027 | Increase |
|---|---|---|---|
| 21 and over (National Living Wage) | £12.71 | £13.21 | 3.9% |
| 18 to 20 | £10.85 | £11.27 | 3.9% |
| 16 to 17 | £8.00 | £8.31 | 3.9% |
| Apprentices | £8.00 | £8.31 | 3.9% |
The government estimates around 2.3 million workers will benefit, with a full-time worker on the National Living Wage around £910 a year better off before tax.
What’s different this year
For the past three years, the 18 to 20 rate has risen much faster than the adult rate (around 44% in total) as the government moved towards a single adult rate. This year, every band rises by the same percentage, so the gap between younger and older workers stops closing for now.
The reason is youth unemployment. Employers have said rising costs make it harder to take a chance on young people with little experience. The government says it still wants one adult rate, but over a longer timescale.
The rise is also above inflation, which the ONS put at 3.5% in the year to September 2026.
The real cost is bigger than the hourly rate
A 3.9% rise in the headline rate is rarely a 3.9% rise in your wage bill. Factor in:
- Employer National Insurance: still 15% on earnings above £5,000 a year, so every extra pound of pay costs more than a pound.
- Pension contributions: auto-enrolment contributions rise with pay.
- Pay differentials: keeping a fair gap for supervisors and experienced staff means rises further up the scale.
- Overtime and premiums: anything calculated from the base rate goes up too.
Where employers get caught out
Most minimum wage breaches aren’t deliberate. They happen when pay sits close to the line and something tips it under. Watch for:
- Salaried staff on modest pay: long or extra hours can take their effective hourly rate below the minimum.
- Deductions and costs: uniforms, equipment, or deductions that benefit the employer can reduce pay for minimum wage purposes.
- Unpaid working time: training, handovers, security checks and travel between sites can all count as working time.
- Birthdays: the higher rate applies from the pay period after a worker moves into a new age band.
- Apprentices: the apprentice rate only applies to those under 19 or in their first year. After that, they’re entitled to the rate for their age.
Getting it wrong means arrears, penalties and being publicly named by the government. Worse, it damages trust with the very people you need to keep.
What to do now
- Find who’s affected. List everyone who will be under £13.21 (or their age band rate) on 1 April 2027.
- Model the full cost. Include NI, pensions and differentials, and build it into your 2027/28 budget.
- Check salaried roles. Compare lower-paid salaries against the hours people actually work.
- Review deductions and unpaid time. Look at uniform policies, equipment costs, training and travel time.
- Plan the conversation. Decide how and when you’ll tell staff about pay changes, and who answers their questions.
- Check your contracts and policies. Make sure pay clauses, overtime and deductions wording still work at the new rates.
The way I see it
I understand why many employers will read this as another cost to absorb, especially on top of everything else in the Budget. But the businesses that handle pay rises best don’t just treat them as a payroll task. They see them as a chance to show their people they’re valued.
Get the numbers right, yes. But also take the time to explain the changes, look after the people just above the line, and give young people a genuine chance to grow. That’s what builds the kind of workplace people want to stay in.
Pay changes are about people as much as payroll. If you’d like help reviewing your pay structures, contracts or how you’ll talk to your team before April, we’d love to help. Email enquiries@thrivelaw.co.uk
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