The Department for Business and Trade (DBT) has released its policy remit for the Low Pay Commission (LPC) to consider when making recommendations on the 2025/26 National Minimum Wage (NMW) and National Living Wage (NLW).
LPC minimum wages review
The remit provides the framework for the LPC’s recommendations on the National Minimum Wage and National Living Wage. It outlines the economic context, the government’s priorities on pay and employment, and the evidence the Commission should weigh when advising on wage rates. It forms the basis for policy decisions that must balance fair pay for workers with business affordability and the wider labour market.
The remit supports the government’s broader “Growth Mission” under the Plan for Change, designed to raise living standards and drive inclusive economic growth. Ministers have reaffirmed their commitment to ensuring the NLW remains at least two-thirds of median UK earnings, which continues to be the key benchmark for tackling low pay. The DBT has tasked the LPC with weighing employer affordability alongside the need to protect workers’ incomes against inflation and rising living costs.
For younger workers, the government has instructed the LPC to consult on removing the separate age band for 18 to 20-year-olds. The aim is to reduce the gap between the youth rate and the NLW, while safeguarding employment opportunities for younger workers and preserving incentives to remain in training or education. The LPC is also responsible for recommending rates for under-18s, apprentices and the accommodation offset, all of which must be set at the highest sustainable level that does not damage job prospects.
Implications for employers
Updated projections suggest the NLW could rise to around £12.71 per hour from April 2026, within a range of £12.55 to £12.86. These figures are indicative rather than final but signal where rates are likely to settle, reflecting stronger than expected wage growth across the economy.
In May 2025, the LPC’s central estimate was £12.65, within a range of £12.50 to £12.80. The revised projections show that wage growth is outpacing earlier forecasts. If the trend continues, the final recommendation due later this year may exceed current estimates. The LPC is expected to deliver its advice by the end of October 2025, after which the government will confirm new rates for implementation in April 2026.
Employers should anticipate further upward pressure on wage costs. A potential increase to £12.71 represents around a 4.1% rise on the current NLW. For sectors employing large numbers of minimum wage workers, including retail, hospitality, social care and cleaning, the impact on payroll budgets could be considerable. Employers should start modelling pay bill increases, adjusting budgets and reviewing the impact on pay differentials, particularly for roles just above the NLW.
The potential removal of the 18 to 20-year-old rate also has implications. If adopted, it would reduce the pay gap between younger and older staff, increasing costs for employers with sizeable numbers of younger workers. However, it could also support recruitment and retention by improving pay competitiveness for young jobseekers.
Employers that provide accommodation should pay close attention to the review of the offset rate, since any adjustment will change the permissible deductions from wages.
Need Assistance?
The LPC’s consultation and evidence-gathering process is ongoing. Employers can contribute by submitting evidence on how proposed increases would affect their sector and workforce. The Commission’s final recommendations are due in October 2025, giving businesses around six months to prepare before the new rates take effect in April 2026.
In short, while the figures remain provisional, the direction is clear: statutory minimum pay rates are set to rise further in line with strong wage growth. Employers should plan ahead by modelling higher wage bills, reviewing workforce strategies and preparing compliance processes well before the new rates come into force.
To discuss the potential impact of the rising minimum wage on your workforce planning, contact us.
The full remit can be read here >>
Author
Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.
She is recognised by Legal 500 and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.
Anne is an active public speaker, immigration commentator, and immigration policy contributor and regularly hosts training sessions for employers and HR professionals.
