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£12.71 an hour sounds great. Unless your team are quietly working for free.

ended 29. December 2025

From 1 April 2026, the National Living Wage (21+) goes up to £12.71 an hour.

On paper, that means:

35 hours a week: £23,132.20 a year

37.5 hours a week: £24,784.50 a year

40 hours a week: £26,436.80 a year

But here’s the thing nobody likes talking about.

If someone is on a salary that looks “minimum wage compliant, but they regularly work extra hours because they’re worried about losing their job, their pay gets watered down. The minimum wage is calculated by averaging the hourly rate over the pay period, based on the hours that count as working time.

So you can end up in this situation without meaning to:

You pay £24,784.50 for a 37.5 hour contract. They actually do 45 hours most weeks. Their real hourly pay drops to about £10.59. That’s below minimum wage.

And it’s not just “overtime”. Things like required training time can count too.

Kate’s take: if your business runs on unpaid hours, you are not paying minimum wage in real life. You are just calling it that.

Questions for business owners:

  • Do you know what hours your team are actually working, or just what’s in the contract?
  • Are people staying late because they want to, or because they feel they have to?
  • Are your managers accidentally encouraging unpaid overtime by praising “always being available”?
  • If HMRC looked at your lowest-paid salaried role and the real hours worked, would you pass?

 

3 responses from the Newspage community

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Editor
Kate Underwood
Founder & Chief People Strategist at Kate Underwood HR and Training
£12.71 an hour is only “affordable” if your business is quietly powered by unpaid overtime. From 1 April 2026, NLW (21+) goes to £12.71. Great. But salaried minimum wage roles become a trap if people regularly stay late, log on at home, or do “mandatory” training in their own time. The maths is brutal: average hourly pay over the pay period. Extra hours dilute the rate. If it drops below NLW, you’re non-compliant. “But they chose to” won’t wash if the culture screams “always available”. Small business fixes that actually work: Stop praising long hours. Praise outputs. No overtime without sign-off. And pay/TOIL it. Pay for training time. Always. Track real hours for your lowest-paid salaried role for 4 weeks. If the job needs 45 hours, redesign it, price it, or add a resource.
Don't sit with your figures crossed and hope HRMC don't come knocking.
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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
I started my career working sixty hour weeks without overtime complaints because I knew something that seems lost to the young generation today.

Early career success comes from outworking your competition, not from calculating whether your hourly rate meets government minimums.

The best opportunities go to people who stay late to finish projects properly, not those who down tools at five thirty because their contract says so.
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Colette Mason
AI Ethics Consultant at Clever Clogs AI
This is where most HR systems become accomplices to wage theft without anyone noticing. You've got time-tracking software that only logs 'official' hours, managers who praise 'going the extra mile,' and a culture that treats unpaid overtime as 'commitment' rather than what it actually is: a compliance failure waiting to happen.

Those businesses at highest risk aren't the ones deliberately gaming the system. They're the ones who've built their operational model around the assumption that salaried staff will absorb workload fluctuations for free. That's not a business model. That's structural wage suppression dressed up as flexibility.

The real test isn't whether your contracts are compliant. It's whether your actual operation would survive if everyone worked exactly their contracted hours and nothing more. If the answer's no, you're not running a viable business. You're running on borrowed labour that HMRC will make you pay back with penalties attached.