What is the minimum wage yearly salary in the UK? (Q&A)

Updated 28 September 2023

The National Minimum Wage is the amount of pay that almost all workers can earn per hour. The minimum wage is an hourly rate, but it applies to all eligible workers, even if they have a salary. Therefore, if your employer pays you a relatively small salary, you can take the time to work out the equivalent hourly rate you are earning, so that you can be sure that you receive the minimum amount. In this article, we discuss the minimum wage in the UK, including the current minimum wage, the factors that affect minimum wage and how to calculate a minimum wage yearly salary.

Understanding minimum wage yearly salary

The minimum wage in the UK is the lowest possible pay that employees can earn on an hourly basis. Therefore, your minimum wage yearly salary can work out to the equivalent of the minimum hourly wage. The UK Labour Government introduced the National Minimum Wage Act in 1998. It was first established at £3.60 per hour.

Since then, the National Minimum Wage increased over time in line with living expenses and inflation. Once a person turns 23, they can receive the National Living Wage, which is a higher rate of pay. All employers must adhere to the proper minimum wage for a worker. If they refuse to pay you this rate, it is a criminal offence. To be eligible for a minimum wage, you may be of school-leaving age or over. The wage applies to:

part-time workers
temporary workers
disabled workers
workers from overseas
apprentices

There are a number of workers who are not eligible for minimum wage yearly salary. These include:

self-employed people
voluntary workers
company directors
members of the armed forces
people on work placements

What is the current minimum wage?

When trying to work out whether your yearly salary meets the National Minimum Wage requirements, it is important to understand how much you can earn per hour. As of 2022, here are the National Minimum Wage rates for different age groups:

for those aged 23 or over, the minimum wage is an hourly rate of £9.50
for those aged between 21 and 22, the minimum wage is an hourly rate of £9.18.
for those aged between 18 and 20, the minimum wage is an hourly rate of £6.83.
for those aged under 18, the minimum wage is an hourly rate of £4.81.
for apprentices (aged between 16 and 18, or are over 19 but are in their first year of the apprenticeship), the hourly rate is £4.81. It is important to note that these hourly rates update on a yearly basis, so make sure that you regularly check the UK government's website to see if the rates change.

How to calculate minimum wage yearly salary

There are several ways that you can calculate your yearly salary to determine whether you are earning the minimum wage. Below, we discuss how you can calculate the amount you are earning per hour, according to the National Living Wage. This can help you to understand if you are earning the minimum wage yearly salary. Here is how you can calculate how much you earn per hour:

1. Find the basic annual amount of hours you work

Most full-time workers are under a contract to work forty hours per week, which equates to around 2,080 hours per year. This does not include holidays or illness, as you may still earn money on these days unless you take more sick leave than your contract allows you to. If you work part-time, you can multiply the hours you work per week by 52 to understand how many hours you work per year.

2. Divide this by the number of times you receive your pay

It is customary for employees to receive their pay every month, on the 28th day of the month, or on the Friday closest to this date. It is possible that you might receive your pay weekly or bi-weekly. If you receive your pay every month, you can divide the hours you work by 12. For example, if you have a contract to work 2,040 hours per year, divide 2,040 by 12, which is around 170 hours per month. This can tell you how many hours your pay per month covers, on average.

3. Divide this number by the amount you earn per month

To work out your hourly pay, you can divide your average hours by the pay you receive each month. For example, if you are on a £24,000 salary per year, you may be earning £2,000 per month before taxes. If you work 170 hours per month, you can divide 2,000 by 170 to find out how much you are earning per hour. This equates to around £11.76 per hour, which is above the minimum wage.

What is working time?

To calculate how much money you earn per hour, it's important to understand what counts as working time. There are a number of situations you may be in that are counted as working time for a minimum wage yearly salary. These include:

You are at work and are partaking in your job. This includes being on standby near or in your workplace but doesn't include break time.
You are waiting to start a job, meeting someone for work or waiting to collect goods for work.
You are travelling in direct connection with work, such as travelling between assignments.
You are training for work.

Working time does not include time spent:

You are travelling between work and home.
You are taking time away from work, including holidays and unpaid sick leave.
You are on industrial action.
You are working on a salaried contract, as it is likely that you already know how many hours you work each year.

Factors that influence pay

There are also other factors that can impact the amount you earn as part of a minimum wage yearly salary. These include:

Overtime

As a salaried worker, your contract may state how much you can earn when you work overtime. According to legislation, there are no legal obligations for a company to pay for overtime. It is important to note that you can include the total hours you work including your overtime when calculating your salary, to see if you are earning the National Minimum Wage.

Commission and tips

If you earn a commission, the UK government states that the amount of commission you receive can equal minimum wage each time you receive your pay. For example, if you are a real estate agent but fail to make a sale, your monthly pay can still equal the minimum wage for the number of hours you have worked that month.

If the commission you have earned throughout the year is less than a minimum wage yearly salary, the employer can top up your earnings to match. Tips and gratuities do not count towards the minimum wage. Therefore, if you are a waiter or waitress and make £30 in tips a week, you do not include this money when calculating if you are earning minimum wage.

Paying taxes on minimum wage

Your employer can take deductions that can reduce your pay to below the minimum wage. For example, tax and national insurance contributions may reduce your average wage to below minimum wage. Therefore, when calculating your minimum wage from your salary, you can calculate the amount you are earning before tax.

What to do if an employer doesn't pay you a minimum wage yearly salary

In the UK, it is illegal for an employer to pay you less than minimum wage for your hours worked. If you calculate that you are not earning the minimum wage, you can bring this up with your employer. If they agree that they have made a mistake, they can update your pay and send you what they owe. If your employer refuses to pay you minimum wage, you can raise this grievance with the Citizens Advice Bureau. They can help you confirm you may earn more and can help you write a letter of grievance to your employer.

If your employer is still refusing to pay a minimum wage yearly salary, you can take them to a tribunal. Legal advice and representation can be incredibly expensive, so ensure this process is worth your time. You can also choose to report your employer to HM Revenue and Customs. They can then decide to investigate your employer and they may be more likely to do this if several people file a complaint. If your employer is refusing to pay minimum wage, consider leaving your job while you wait for what your employer owes you.

This article is based on information available at the time of writing, which may change at any time. Indeed does not guarantee that this information is always up-to-date. Please seek out a local resource for the latest on this topic.