COMPLIANCE
The national minimum wage: how far it’s come and what’s next
Jeni Morris, IPPE Consultant, looks back at the evolution of the national minimum wage (NMW) over time and ponders what could be coming next in this space
T he NMW tends to only make headlines after a rise in the rates is announced or a headline underpayment story takes over. But that headline is just the tip of the iceberg in a longer story: more than 20 years of legislation has transformed the UK labour market, balanced the protection of workers against practicality for employers and inspired debate which feels as pressing today as it did when it was enacted in 1999. In retrospect, NMW was revolutionary. Prior to its arrival, low pay was prevalent and, in many markets, systemic. The notion of a statutory floor for wages was itself controversial at the time, with people arguing it would destroy jobs and stunt growth. But the reverse appeared: jobs were created and millions of the lowest-paid workers saw significant improvements in their earnings. For workers in the hospitality, care, retail and cleaning industries, the minimum wage fundamentally changed expectations. It was in the following years that refinement happened. Rates were set for young workers and apprentices. Over the years, enforcement powers were strengthened, with HM Revenue and Customs taking responsibility for investigations, as well as increasing penalties for non-compliance. But progress has been anything but smooth. The legislation is deceptively complex. A single hourly rate on the surface appears simple. In reality, compliance relies
on a system of elaborate rules regarding deductions, working time, salaried workers and employees on strange rotas. Simple- seeming payroll practices, paid rest breaks, travel time and uniform deductions can tip an employer into a breach, even though it wasn’t their intention to underpay. Technicalities have turned out to be a surprise for many but over the years have caught out businesses of all sizes. Most of the most infamous underpayment cases aren’t about being wilfully exploitative but rather having misunderstood (or misapplied) the rules. Reflecting on that history, one clear lesson stands out – knowledge and education are just as critical as enforcement. Workers must understand their rights to ensure they know when something isn’t right. And employers need some type of clarity, direction and practical help to do things correctly before inspectors and fines come into play. “The national minimum wage is no longer the experimental idea it was in 1999. It’s become a cornerstone of UK employment law”
So, what does the future hold for the NMW? There’ll certainly be an increase in enforcement activity, with scrutiny around evidence of time and attendance records for salaried employees. I also think the spotlight will continue to shine on employment models, such as gig work, which will raise new questions regarding how the NMW applies to a modern economy, as the concept of ‘time worked’ often looks very different from traditional shift-based patterns. Another likely development is greater focus on fairness across age groups. With rates already converging, a single adult minimum wage rate could be on the horizon in the next few years. That shift would mark another milestone: from simply establishing a safety net to embedding genuine equity across the workforce. Together with the launch of the Fair Work Agency, things are going to be interesting over the next few years. The NMW is no longer the experimental idea it was in 1999. It’s become a cornerstone of UK employment law. But it isn’t static, and it continues to evolve, tested by changing work patterns, economic challenges and societal expectations. Looking forward, the challenge is to preserve its founding spirit – fair pay for fair work – while adapting to the realities of a workforce which looks very different from the one when the NMW was enacted back in 1999. n
| Professional in Payroll, Pensions and Reward | December 2025 - January 2026 | Issue 116 34
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