The National Minimum Wage (NMW) and the National Living Wage (NLW) changes took effect 16 days ago, but are you absolutely certain your payroll processes are compliant with the new legislation? For UK payroll processors, accountants, and payroll bureaus, keeping up with these updates is not just a matter of responsibility, but a legal requirement to protect both employers and employees.
Let’s review the key updates and find out how you can confidently manage compliance moving forward.
Recap of NMW & NLW changes
The 2025/26 updates to NMW and NLW introduced significant rate increases across different worker age groups:
- 16 and 17-year-olds: The NMW rose from £6.40 an hour to £7.55.
- 18 to 20-year-olds: The NMW rose from £8.60 an hour to £10.00.
- 21 and older: The NLW increased from £11.44 an hour to £12.21.
If you manage payroll for businesses affected by these updates, ensuring timely compliance with the new rates is critical. Even an unintentional oversight could result in underpayments and penalties.
Sidenote: Neonatal care leave and pay
Alongside these wage rate updates, businesses must prepare for the introduction of neonatal care leave and pay, which began on the 6th of April 2025. This legislation grants paid leave to parents whose newborns require neonatal care. Payroll and HR departments must incorporate this new entitlement into their policies, systems, and budgets.
Why compliance is so important
Remaining compliant with NMW and NLW legislation is crucial for several reasons:
- Avoiding penalties: Failing to comply with labour laws can result in penalties of up to 200% of the amount owed, along with fines from HMRC. For repeat offences, businesses may face prosecution.
- Reputation protection: Non-compliance could lead to a damaged reputation if an organisation is listed on the Government’s public fines list, which is regularly shared with the media.
- Employee satisfaction: Ensuring employees are paid correctly contributes to higher morale and retention, making compliance a win-win for both employer and staff.
- Legal obligations: Adherence to employment law is a non-negotiable responsibility for all UK businesses.
With so much at stake, payroll professionals must prioritise compliance and leverage tools and strategies to make this process easier.
How cloud payroll software ensures compliance
The easiest way to stay compliant with NMW and NLW legislation is to use modern payroll technology, such as cloud payroll software. Advanced platforms update in real time to reflect any legislative changes, ensuring all employees are paid correctly with minimal manual input.
Benefits of using cloud payroll software
- Automatic updates: Cloud payroll software incorporates changes to rates and regulations as soon as they become effective, helping you avoid errors or missed updates.
- Time-saving features: By automating calculations, including wage compliance, these solutions allow payroll professionals to focus on more strategic tasks.
- Transparency for employees: Employee self-service tools allow staff to view payslips, annual leave, and compliance-related updates with ease, building trust.
- Secure storage: Cloud-based systems back up data automatically, ensuring records are safe and accessible for audits or reviews.
Why BrightPay makes compliance seamless
BrightPay’s cloud payroll software is specifically designed to help accountants and payroll processors manage compliance stress-free. This platform offers:
- Real-time compliance updates: BrightPay integrates changes like NMW and NLW rate revisions without any manual software updates required.
- Exceptional support: Access expert help whenever you need it — at no extra cost — ensuring smooth payroll operations without added expenses.
- User-friendly interface: BrightPay’s intuitive design enables payroll processors to complete tasks efficiently while reducing the risk of errors.
- Automated efficiency: Leverage features built to streamline payroll processes and enhance profitability through automation and precision.
*BrightPay users experienced these recent wage changes seamlessly, reiterating its reputation as a trusted compliance tool.
Take the stress out of payroll compliance
The changes to NMW, NLW, and the introduction of neonatal care leave highlight the importance of staying proactive. By upgrading to reliable cloud payroll software, payroll professionals can ensure compliance while saving time and reducing the risk of costly manual errors.
Switching to BrightPay is straightforward, and our expert team is here to support you every step of the way. Don’t stay behind on critical updates — invest in efficient, compliant payroll management today.
