The NLW & NMW rates change on 1 April each year. A worker’s rate can also change during the tax year due to a change in their age or due to moving from the apprentice rate to the NLW/NMW rate for their age.
The same approach applies, whatever the reason for the change.
As per The National Minimum Wage Regulations 2015, Regulation 4(2):
“The single hourly rate of the national minimum wage at which a worker is entitled to be remunerated as respects work, in a pay reference period, is the rate which applies to the worker on the first day of that period.”
https://www.legislation.gov.uk/uksi/2015/621/regulation/4/made
As per The National Minimum Wage Regulations 2015, Regulation 6:
A “pay reference period” (1) is a month, or in the case of a worker who is paid wages by reference to a period shorter than a month, that period.
- This is the period prescribed for the purpose of section 1(4) of the Act.
https://www.legislation.gov.uk/uksi/2015/621/regulation/6/made
A pay reference period can be for example one week, a fortnight, one month. A pay reference period cannot be longer than 31 days.
Pay reference period means when the hours were worked, not the pay date. It is the period the worker is being paid for – the period when they did the work.
So, you use the rate which applies to the worker on the first day of their pay reference period.
The rate is always based on day one of their pay reference period. You are not splitting the week/month.
If day one of the pay reference period is before the NLW/NMW increase, you use the old rate for the whole of that pay reference period.
If day one of the pay reference period is on or after the NLW/NMW increase, you use the new rate for the whole of that pay reference period. So, for example:
If you are paying a worker for a pay reference period of 28/03 to 03/04, day one of that pay reference period is 28/03.
28/03 is before the annual NLW/NMW increase, so the worker would be paid at the old NLW/NMW rate for the whole of that pay reference period from 28/03 to 03/04.
Day one of the next pay refence period would be 04/04.
04/04 is after the NLW/NMW increase, so the worker would be paid at the new NLW/NMW rate from 04/04.
The date the payment is made is irrelevant, it is the period they are being paid for that is the key.
If you want to pay a worker more than the NLW/NMW you can, but you cannot pay them less.
If you have a new worker that starts part way through a pay reference period, their first pay reference period starts on the day their contract starts.
So, for example if the existing workers are being paid for the period from 25/03 to 24/04 and a new worker joins on 06/04:
The existing workers would be paid at the old NLW/NMW rate, as day one of their pay reference period is 25/03 and this is before the NLW/NMW increase.
The new worker who joined on 06/04 would be paid at the new NLW/NMW rate, as day one of their pay reference period is after the NLW/NMW increase.
The NLW/NMW rates can be found on GOV.UK at https://www.gov.uk/national-minimum-wage-rates
