Cashier in a cafe or restaurant taking customer's payment using a digital card reader
Where next for the National Living Wage?

Each year, minimum wage rates are reviewed and set for the following April. As part of this process, the Low Pay Commission (‘the Commission’) is seeking evidence from employers and employees to inform their recommendations to the Government for rates from April 2027. Potential rates under consideration are in the range of £13.02 to £13.34 for the National Living Wage.

If you or your business is impacted by changes to minimum wage rates, then the Commission would be keen to hear your views.

Background 

The National Minimum Wage (NMW) was introduced in April 1999, followed by the National Living Wage (NLW) in April 2016. The NLW is set at a higher rate than the NMW. Initially the NLW applied to the over 25s only but, over time, the age limit has been reduced, and it now applies to those aged over 21. The NMW applies to workers aged between 16 and 20 inclusive, and to apprentices aged under 19 or in their first apprenticeship year. 

Employers must pay their employees at least the appropriate NLW/NMW rate for the time they are working. Where employees are paid below the rates, employers can be penalised and forced to pay back-pay.

Around 6% of the employed population is paid a rate within 5p of the NLW/NMW rates. The Commission estimates that around a third of all jobs paying around the minimum wage are in retail and hospitality occupations.

Rates are increased on the 1 April each year. From the 1 April 2026 the rates are: 

  • £12.71hr for those over 21 years old – up from £12.21/hr
  • £10.85hr for 18- to 20-year-olds - up from £10.00/hr 
  • £8.00 for those under 18 - up from £7.55/hr 
  • £8.00 for apprentices - up from £7.55/hr 

Annual review 

Rates are reviewed annually by the Commission, who are given a remit from the Government to help steer their recommendations. When rates for 1 April 2026 onwards were recommended by the Commission last year, they were intended to be a real-terms increase for those earning the NMW/NLW as the suggested increases exceeded estimates of future inflation. It is less clear that this goal will be achieved now due to increased prices and uncertainty over the war in the Middle East. 

The Government’s brief to the Commission for 2027 asks them to suggest a NLW rate which meets a ‘benchmark’ figure equal to two-thirds of median earnings. The Commission has also been asked to consider how best to align the NLW and NMW. The long-term aim is that those over 18 should also benefit from the higher NLW rate. However, the Commission has a good degree of flexibility over how and when this should be achieved. There is some evidence that increasing rates too rapidly for younger people could affect their employment prospects, so it is a move that the Commission are  suggesting is made gradually. 

What is a fair rate? 

Determining a fair rate for lower paid workers can be challenging. When rates went up this month, some employers reported concerns about the impact on their ability to offer work, take on staff or differentiate pay levels based on performance. Concerns have also been expressed that the increase in wage rates follows an increase in Employers National Insurance last year and that this has put pressure on those industries such as hospitality where many staff are on NLW/NMW. 

On the other hand, if rates do not increase in line with the cost of living, it can leave lower paid workers struggling to make ends meet. 

The Commission must balance all these concerns and also consider factors like the state of the labour market and the wider economy. 

Based on their current instructions, the Commission thinks that a rate of between £13.02 and £13.34 (an increase of between 2.4% and 5.0%) would be required in April 2027. 

How to contribute

If you would like to contribute evidence to the Commission, there is an online consultation platform which can be used by both employers and employees to share their views. Written evidence can also be sent to [email protected]. The ATT will not be responding on behalf of members. 

The Commission is particularly interested in comments from employers on:

  • The affordability of an increase within the range of £13.02 to £13.34 for the NLW from April 2027.
  • The impact of the increases from 1 April 2026.
  • The effect of recent minimum wage increases on the employment prospects of those aged 18 to 20. 

The consultation closes on Friday 26 June 2026. 

 

This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.   

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