Home » HR Services » Minimum Wage and Union Agreements
Minimum Wage and Union Agreements in the UK
What Overseas Employers Need to Know
If you’re an overseas business with a UK workforce—or planning to hire or send staff to the UK—it’s important to understand the UK’s legal pay obligations.
Unlike some jurisdictions, the UK has both a legally binding National Minimum Wage (NMW) and the National Living Wage (NLW). Additionally, for some sectors—especially engineering and construction—there may be union-negotiated agreements like NAECI, which set project-specific wage levels and terms. We help overseas employers understand and comply with these UK-specific rules.
Legal Minimum Pay Rates in the UK
What Is the National Minimum Wage?
The UK requires employers to pay workers a minimum hourly wage, depending on age and employment status. As of 1 April 2026, the rates are:
| Worker Type | Hourly Rate |
|---|---|
| Age 21 and over (NLW) | GBP 12.71 |
| Age 18 to 20 | GBP 10.85 |
| Under 18 | GBP 8.00 |
| Apprentices (under 19, or in the first year of apprenticeship) | GBP 8.00 |
These are legally enforced. Employers cannot include benefits, tips, or other allowances when calculating whether someone is receiving the correct rate.
Why You Need to Track Hours Carefully
If you employ people on a fixed monthly or annual salary, you still need to ensure that the average hourly rate meets the legal minimum. This means:
- Tracking actual hours worked (especially for part-time or variable-hour employees).
- Being cautious with deductions (uniform costs, training, etc.) that may reduce take-home pay below the minimum threshold.
Sending Workers to the UK? Collective Agreements Might Apply
For engineering, energy, and construction projects, collective bargaining agreements may apply—such as the NAECI (National Agreement for the Engineering Construction Industry).
NAECI sets agreed wage rates and working conditions for hourly-paid workers on certain projects and sites. If you’re operating on one of these sites, the main contractor or customer will typically notify you as part of the tender or onboarding process.
You must comply with NAECI rates and conditions in addition to UK minimum wage laws.
How Türner & Co Can Help
We help overseas employers understand whether:
- UK minimum wage rules apply
- Collective agreements like NAECI are relevant
- You’re at risk of underpayment
- Your pay systems need updating or monitoring
We can also provide:
- Payroll compliance reviews
- Wage monitoring support
- Setup of compliant UK payrolls
- Advice on union agreements and sector-specific rates
FAQs
Yes, the rules apply to all eligible workers, including part-time, fixed-term, and casual workers.
You must repay backdated underpayments, and HMRC may impose fines up to GBP 20,000 per worker and publish your business name online.
Yes, bonuses and commissions count, but tips, expenses, or benefits like accommodation and meals do not.
Yes, if your workers are on a site where NAECI applies, you are required to comply. Non-compliance can jeopardize project access and result in disputes.
Contact Our Experts
Contact us today to make sure your pay arrangements are compliant and competitive for the UK market.
Kate McDermott
Director
Head of Indirect Tax & HR
Jennifer Cooke
Assistant Manager
Management Reporting, Statutory Accounts, HR & Payroll