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Know your pay reference period

As part of the UK Autumn Budget 2017, the government announced it has accepted the Low Pay Commission (LPC) recommendations for new National Minimum and National Living Wage Rates.


On January 29 2018, HMRC’s software developer support team advised: “The rates for the National Minimum Wage and the National Living Wage will be going up on 1st April.”


But, this is not correct. A worker must be paid at the new minimum rates for the first full pay reference period that starts on or after 01 April 2018.


So, for example, a worker is paid weekly in arrears on April 6 2018 for the week that commences March 26 and ends April 1 2018. The weekly pay reference period starts before April 1 2018 and the National Minimum Wage requirement is met if the worker is paid at the rates that applied at the start of the period. The first full pay reference period on or after April 1 2018 is actually the week that commences April 2 2018, ends on April 8, and is paid April 13.


This is not the same as the rates being effective April 1 2018. What HMRC should have said is that the necessary National Minimum Wage (Amendment) Regulations 2018 come into force on April 1 2018.


I wonder if we should be concerned that the body responsible for the enforcement and compliance regime do not know this basic fact?!


For compliance purposes, employers only have to ensure that the first full pay reference period on or after April 1 2018 is paid at the increased rates.


In addition, remember that both the Minimum and Living Wage rates payable are dependent on the worker’s age at the start of the pay reference period. The rate in force at the start of the pay reference period can be paid for that entire period.


Remember the increased rates but always think about the pay reference period!


The following are the new hourly rates that will apply for the first full pay reference period on or after April 1 2018:



Current Rates

From April 2018








Adults (25+) aka the National Living Wage





Adult (21 – 24)





Youth Development (18 – 20)





16 – 17 Year Old (under 18 but over school leaving age)











* For apprentices aged 16 to 18 and those aged 19 or over who are in their first year. All other apprentices are entitled to rate applicable for their age.

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