What is the Low Pay Commission and how does it affect the minimum wage?
The Low Pay Commission (‘LPC’) is an independent body that advises the UK government on the appropriate rates to set for the National Minimum Wage (paid to those aged under 21) and the National Living Wage (paid to those aged 21 and over). The LPC makes recommendations to the government each autumn prior to the new rates coming into effect on the first of April each year. Prior to its recommendations, the government sets it a remit outlining factors to consider when recommending the National Minimum Wage and National Living Wage rates. You can find the most recent remit here.
What are the key changes for April 2026?
The government has issued significant changes to the Low Pay Commission’s (LPC) remit that could fundamentally alter how minimum wage rates are set from April 2026 onwards. The key changes to the remit are set out below.
Ending ‘discriminatory age bands’
One of the most significant changes involves addressing what the government terms ‘discriminatory age bands.’ Currently, workers aged 18-20 and below receive lower minimum wages than those aged 21 and over. The removal of these age bands could result in substantial increases for younger workers and apprentices, significantly impacting sectors that rely heavily on these demographics, including retail, hospitality, and care services.
It remains to be seen if the LPC will recommend removing the 18-20 year old band altogether in April 2026. The government maintains in the remit that it is committed to do so. However, the LPC may suggest closing the gap between the pay rates for the top band and the 18-20 band (currently these are set at £12.21 vs £10 respectively).
NLW set to change
The new remit also asks the LPC to ensure that the National Living Wage rate will not fall below two-thirds of UK median earnings for workers in the National Living Wage population, a recognised measure of low hourly pay. Any new hourly rate will take account of the cost of living and inflation forecasts between April 2026 and April 2027, labour market impacts, business competitiveness and wider economic conditions. At the time of writing, the LPC has estimated that, to achieve this, the National Living Wage would need to rise from £12.21 an hour to £12.71 by April 2026. However, this may change as the LPC’s projection currently ranges from £12.55 to £12.86.
Apprentices and under 18s
The government has also requested for the LPC to publish recommendations about the National Minimum Wage rates that should apply from April 2026 for under 18s and the apprentice National Minimum Wage rates. The government would like these to be set as high as possible without damaging the employment prospects of each group.
Strategic considerations for employers
Review salaries: Consider the implications of removing age-based pay differentials, particularly if your business model relies on lower rates for younger workers or apprentices.
Budget for 2026: Build scenarios for various increase levels into 2026 budget planning, recognising that the NLW rate may rise to as high as £12.86 (depending on the cost of living). Employers could also utilise the period prior to April 2026 to consider if any changes need to be made to the workforce and how efficiency savings can be made.
The LPC will publish its recommendations in the autumn setting out the rates to apply from April 2026. This is expected to come before October 2025.
Please note the contents of this article do not constitute legal advice. If you require any further information or if you would like our assistance, please contact us at employment@berrysmith.com or on 02920 345 511.