Minimum Wage and Apprentices, What Employers Should Check Before April 2027
Overview
Minimum wage compliance is about more than the hourly rate shown on a payslip. Employers must use the correct age or apprentice rate, count the relevant working time and check whether deductions or required purchases reduce pay below the legal minimum.
As at 13th October 2026, the confirmed apprentice minimum wage is £8.00 per hour, introduced on 1st April 2026. The increase to £6.40 was a change made in April 2024, not an announced rate for April 2027.
The official sources reviewed do not yet provide confirmed April 2027 rates. Employers should prepare cost forecasts using clearly labelled assumptions, then update them when the Government announces the new rates.
Detailed Content
Current minimum wage rates
The confirmed hourly rates from 1st April 2026 are:
Age 21 and over, National Living Wage - (£12.71)
Age 18 to 20 - (£10.85)
Under 18, above compulsory school leaving age - (£8.00)
Eligible apprentices - (£8.00)
These are statutory minimums, not recommended pay levels. Employers can pay more.
Minimum wage rights generally apply to qualifying workers. Different rules can apply to genuine self-employed people and company directors acting solely as office holders. Check the working relationship rather than relying only on a job title.
Who can receive the apprentice rate?
The apprentice rate applies to apprentices who are:
Under 19, or
Aged 19 or over and in the first year of their apprenticeship.
An apprentice aged 19 or over who has completed the first year must receive at least the minimum wage for their age. A qualifying first-year apprentice aged 21 or over can still receive the apprentice rate.
Keep evidence of the apprenticeship, date of birth and start date. An informal description such as “trainee” does not automatically make someone eligible for the apprentice rate.
When must a higher rate be applied?
Rates normally change on 1st April each year. A higher age-related rate can also become due when a worker turns 18 or 21, or when an apprentice no longer qualifies for the apprentice rate.
The higher minimum applies from the first pay reference period starting on or after the relevant change. It does not necessarily apply part-way through an existing period on the birthday itself.
For example, if monthly pay reference periods run from the 16th to the 15th, an April rate increase normally applies from the period beginning on 16th April.
Common reasons for underpayment
Even an employer intending to pay correctly can underpay if it overlooks:
Birthdays or the completion of an apprentice’s first year.
Unrecorded overtime, opening and closing duties or required training.
Apprenticeship training time that must be included in paid working time.
Travel between work assignments that counts as working time, rather than ordinary commuting.
Uniform or tool costs, including required purchases made directly by the worker.
Salary sacrifice arrangements that reduce minimum wage pay.
Incorrect payroll updates or assumptions about salaried staff.
Tips and service charges cannot be used to make up minimum wage pay. Not every deduction has the same treatment, so check the rules rather than comparing take-home pay with an hourly minimum.
Minimum wage compliance is assessed using the applicable pay reference period and work-type rules. A compliant annual average or headline hourly rate is not always enough.
Enforcement, penalties and public naming
Minimum wage enforcement operates under the Fair Work Agency, with HMRC officers acting as enforcement officers for this work.
Employers can be required to repay arrears and face a civil penalty calculated at 200% of the underpayment, subject to a £100 minimum penalty and a maximum of £20,000 per worker. The penalty is reduced by 50% if all arrears and half the penalty are paid within 14 days under the applicable notice rules.
Employers may also be publicly named through the Government’s naming scheme. Naming is subject to policy and is not automatic in every case. Serious cases can lead to further enforcement action.
Do not assume that an accidental mistake cannot result in arrears or a penalty.
Employment Allowance and wage-cost budgeting
Employment Allowance currently lets eligible employers reduce employer Class 1 National Insurance liability by up to £10,500 each tax year. This amount took effect on 6th April 2025.
Eligibility restrictions apply. For example, a company with one director cannot claim if that director is its only employee liable for secondary Class 1 National Insurance. Connected companies also face restrictions.
The allowance is not a grant towards wages and cannot exceed eligible NI liability. Forecast wages, employer NI and pension contributions separately, using the reliefs and thresholds relevant to each worker. Recheck the rules for 2027/28 before finalising next year’s budget.
Keep minimum wage records for at least six years
Under the current rules, employers must retain records proving minimum wage compliance for at least six years. The retention period runs from the end of the pay reference period following the period covered by the records.
Keep appropriate evidence of:
Pay, deductions and relevant adjustments.
Hours worked, overtime and required training.
Pay reference periods and applicable rates.
Dates of birth and apprenticeship dates.
Contracts, working arrangements and any correction calculations.
Payroll records alone may not explain all working time or required purchases. Keep the supporting evidence too, with appropriate access controls for personal information.
What if you discover an underpayment?
Identify all affected workers and periods, calculate the statutory arrears and pay them promptly. Correct the underlying payroll or record-keeping problem and retain evidence.
Where the minimum rate has increased, arrears may need to be uplifted using the current rate for the band that applied when the underpayment happened. The calculation is not simply a replacement of every historical hour with the worker’s current age-related rate.
Seek advice if the calculation is uncertain. Prompt correction is important, but do not assume it automatically prevents penalties or public naming. If an enforcement letter or notice arrives, respond within the stated deadline and obtain support.
Step by Step Procedure
Audit current compliance now. Check each qualifying worker against the confirmed 2026 rates, using relevant hours, pay and deductions.
Check age and apprentice eligibility. Record birthdays, apprenticeship start dates and the dates entitlement changes.
Review working time and costs. Check training, extra duties, working travel, uniforms, tools and salary sacrifice.
Forecast April 2027 costs. Use clearly labelled scenarios until rates are confirmed. Include employer NI and pension costs.
Check Employment Allowance. Confirm eligibility and claim correctly against eligible liability.
Update and test payroll. Once new rates are confirmed, apply them from the correct pay reference period and verify the first affected payroll.
Retain evidence. Keep minimum wage records for at least six years and review compliance regularly.
Correct problems promptly. Calculate arrears properly, pay workers and seek advice about any enforcement correspondence.
Frequently Asked Questions and Answers
Is the apprentice rate increasing to £6.40 in April 2027?
No. £6.40 was the apprentice rate introduced in April 2024. The confirmed rate from April 2026 is £8.00. Check official announcements for April 2027 rather than using an old rate.
What will the National Living Wage be in April 2027?
The official sources reviewed as at 13th October 2026 do not provide a confirmed rate. Any budgeting figure should be labelled as an assumption or forecast until the Government confirms the rates.
Does every worker aged 21 or over receive the National Living Wage?
Normally, qualifying workers aged 21 or over receive the National Living Wage. However, an eligible apprentice in the first year of their apprenticeship may receive the apprentice rate. Check both age and apprenticeship status.
Does a birthday increase apply on the birthday itself?
The higher minimum normally applies from the first pay reference period starting on or after the birthday. Track the entitlement date and your payroll’s pay reference periods.
Can uniform deductions cause an underpayment?
Yes. Required uniform or tool costs can reduce pay for minimum wage purposes, including some purchases made directly by the worker. Check the applicable calculation, not just the rate in their contract.
How long should records be kept?
Minimum wage compliance records must normally be kept for at least six years under the current rules. Do not rely on the shorter PAYE retention period for this purpose.
Does Employment Allowance pay for wage increases?
No. It reduces eligible employer Class 1 National Insurance liability by up to £10,500 under current rules. It does not directly cover wages or pension contributions.
How can 360 Accounts help?
360 Accounts can help review payroll calculations, pay-rate changes, employer NI and payroll cost forecasts. We can also help organise records and review correspondence within the agreed scope of support, with specialist employment-law advice where needed.