adminThe National Living Wage will rise from £12.71 to £13.21 an hour on 1 April 2027, a 50p (3.9%) increase. The government confirmed the new rate on 28 October 2026, accepting the Low Pay Commission’s recommendations in full.
For businesses that use agency workers, the cost goes up by more than 50p. Holiday pay, employer National Insurance and pension contributions all rise with pay, so in the worked example below a 50p wage increase adds about 67p an hour to a temp’s charge rate.
Starting Point Recruitment supplies temporary and permanent staff to employers across Birmingham, Walsall and the wider West Midlands. This guide sets out the confirmed 2027 rates, how they feed into agency charge rates and what to check with your agency before April.
Key takeaways
- The National Living Wage for workers aged 21 and over rises to £13.21 an hour from 1 April 2027.
- The 18 to 20 rate rises to £11.27, and the 16 to 17 and apprentice rate rises to £8.31.
- Statutory on-costs mean a 50p pay rise adds about 67p an hour to the cost of a full-time temp in our example.
- Any temp currently paid between £12.71 and £13.20 an hour must move up to at least £13.21.
- Agency workers who have completed 12 weeks in the same role must get the same pay as comparable permanent staff, so an in-house pay rise can also lift temp rates.
- Ask your agency for a written breakdown of new charge rates well before April.
What Is the National Living Wage From April 2027?
The National Living Wage is the legal minimum hourly rate for workers aged 21 and over. Separate National Minimum Wage rates apply to workers aged 16 to 20 and to eligible apprentices.
All the new rates apply from 1 April 2027. In practice, a worker must be paid the new rate from the start of their first pay reference period beginning on or after that date.
Minimum Wage Rates: April 2026 vs April 2027
| Rate | April 2026 | April 2027 | Increase |
| National Living Wage (21 and over) | £12.71 | £13.21 | 50p (3.9%) |
| 18 to 20-year-old rate | £10.85 | £11.27 | 42p (3.9%) |
| 16 to 17-year-old rate | £8.00 | £8.31 | 31p (3.9%) |
| Apprentice rate | £8.00 | £8.31 | 31p (3.9%) |
Source: GOV.UK, Minimum wage rates for 2027, published 28 October 2026.
Earlier in 2026, the Low Pay Commission had published an indicative range of £13.02 to £13.34 for April 2027, with a central estimate of £13.18. The confirmed rate of £13.21 sits just above that central figure.
The Commission also recommended pausing plans to bring the 18 to 20 rate closer to the National Living Wage, citing weaker demand for young workers. As a result, the gap between the two rates widens slightly, from £1.86 to £1.94 an hour.
Do Agency Workers Get the National Living Wage?
Yes. Agency workers are entitled to the National Living Wage, or the National Minimum Wage rate for their age, for every hour they work, in the same way as directly employed staff. The agency or business that pays the worker is responsible for making sure the legal minimum is met.
Enforcement is also changing. The Fair Work Agency, which launched on 7 April 2026, is due to take over minimum wage enforcement from HMRC in April 2027 and to gain new powers to enforce holiday pay. Employers using agency staff can read more in SPR’s guide to the Employment Rights Act 2025 and agency workers.
What Happens to Agency Workers’ Pay After 12 Weeks?
Under the Agency Workers Regulations 2010, once an agency worker has completed 12 weeks in the same role with the same hirer, they are entitled to the same pay as a permanent colleague doing the same job. A break of six weeks or less does not reset the count.
This matters in April. If you give your own staff a pay rise, temps who have passed the 12-week point should receive the same increase, and their charge rates will rise to match. GOV.UK explains the rules in its guide to agency workers’ rights.
How Will the National Living Wage Increase Affect Temp Agency Charge Rates?
A temp agency charge rate is the hourly amount a business pays the agency. The pay rate is what the worker receives. The difference covers the employment costs the agency carries as the business that pays the worker, plus the agency’s own fee.
What Makes Up a Temporary Worker’s Charge Rate?
- Pay rate: the hourly wage paid to the worker. From April 2027, this must be at least £13.21 for workers aged 21 and over.
- Holiday pay: statutory leave of 5.6 weeks a year, which works out at 12.07% of pay.
- Employer National Insurance: 15% on earnings above £5,000 a year (about £96 a week).
- Employer pension contributions: at least 3% of qualifying earnings for workers enrolled in a workplace pension.
- Agency fee: the agency’s margin for sourcing, screening, payroll, compliance and ongoing account management.
Overtime, night and weekend premiums, and specialist tickets such as forklift or HGV licences also affect the pay rate, and so the charge rate.
The first four items rise automatically when pay rises. The agency fee does not have to. If your agency’s fee is a fixed amount per hour, it can stay the same. If it is a percentage of pay, it will rise in line with wages, so ask which model your agency uses.
How Much Will a Temp Worker Cost Per Hour in April 2027?
The example below shows how the 50p rise flows through to the hourly charge rate for a full-time temp aged 21 or over, working 37.5 hours a week on the National Living Wage and enrolled in a workplace pension.
Example Temp Charge Rate: April 2026 vs April 2027
| Cost per hour | April 2026 | April 2027 | Change |
| Pay rate | £12.71 | £13.21 | +50p |
| Holiday pay (12.07%) | £1.53 | £1.59 | +6p |
| Employer National Insurance (15%) | £1.75 | £1.84 | +9p |
| Employer pension (3%) | £0.33 | £0.35 | +2p |
| Statutory employment cost | £16.32 | £16.99 | +67p |
| Agency fee (illustrative, fixed) | £2.50 | £2.50 | No change |
| Hourly charge rate | £18.82 | £19.49 | +67p (3.6%) |
In this example, a 50p rise in pay adds 67p an hour to the charge rate. Over a 37.5-hour week, that is about £25 more per temp, or roughly £250 a week for a team of ten full-time temps.
If the agency fee were set as a percentage instead, for example 15% of the statutory cost, the fee would rise by about another 10p an hour.
How the figures were worked out: holiday pay is 12.07% of the pay rate. Employer National Insurance is 15% of weekly pay (including holiday pay) above £96.15, and pension is 3% of weekly pay above £120, using the 2026/27 thresholds and spread across 37.5 hours. Part-time temps, workers who are not enrolled in a pension and other shift patterns will produce different figures. The £2.50 agency fee is hypothetical. These figures are illustrative and are not SPR’s charge rates.
Which Employers Will Feel the April 2027 Rise Most?
Businesses with many roles paid at or close to the legal minimum will see the biggest change. These include:
- Warehousing, transport and logistics
- Manufacturing and production
- Hospitality and catering
- Contact centres and customer service
- Cleaning and facilities management
- Retail
Why Pay Rates Above the Minimum May Also Rise
Anyone currently paid between £12.71 and £13.20 an hour must move up to at least £13.21 from April. A skilled operative or shift lead paid £13.00 today, for example, would fall below the new legal minimum without a pay increase.
Many employers also raise rates to keep a gap between new starters and experienced staff, team leaders or forklift drivers. Keeping that gap helps with retention, but each increase carries the same on-costs shown in the example above.
If you are comparing a recruitment agency in Birmingham or elsewhere in the West Midlands, ask for rates based on the local market for each role, not just the legal minimum.
How Can Employers Prepare for the April 2027 Increase?
There are five months between the announcement and the new rates taking effect. These steps will help you budget with fewer surprises.
- List Roles Paid Below £13.21
Identify every temporary and permanent role currently paid below £13.21 an hour, including workers aged 18 to 20 and apprentices, who have their own rates. Use the per-hour figures above to estimate the effect on weekly, monthly and annual costs.
- Check Your Agency Terms
Look for clauses covering statutory cost increases, how much notice the agency must give before changing charge rates, and whether the agency fee is fixed or a percentage of pay.
- Ask for a Written Breakdown
Ask your agency to show the new pay rate, holiday pay, employer National Insurance, pension and fee for each role, and the date the new charge rates start. A clear breakdown shows which part of any increase is statutory and which, if any, is a change to the agency fee.
- Plan for 12-Week Equal Pay
If you plan an in-house pay review for April, identify temps who have passed, or will soon pass, 12 weeks in the same role. Their pay should match the new rates for comparable permanent staff.
- Forecast Demand Early
Review planned projects, seasonal peaks and likely absence for spring and summer 2027. Agreeing requirements early gives your agency more time to find suitable temps before demand picks up.
National Living Wage 2027: Frequently Asked Questions
When does the National Living Wage go up in 2027?
On 1 April 2027. Workers must be paid at least £13.21 an hour from the start of their first pay reference period beginning on or after that date.
What is the minimum wage for 18 to 20-year-olds in 2027?
£11.27 an hour from 1 April 2027, up 42p from £10.85.
Will my temp charge rate go up by exactly 50p an hour?
Usually by more. Holiday pay, employer National Insurance and pension contributions rise with pay, so in the example above a 50p pay rise adds about 67p an hour to the charge rate for a full-time temp.
Can a recruitment agency put its charge rates up in April?
Agency terms of business usually allow statutory cost increases, such as a minimum wage rise, to be passed on. Check your terms for the notice period and whether the agency fee itself can change.
Who enforces the minimum wage for agency workers?
HMRC enforces it on behalf of the Fair Work Agency until April 2027, when the Fair Work Agency is due to take over enforcement directly. Employers who underpay must repay the arrears, can be fined up to £20,000 per worker and may be publicly named.
Why Work With Starting Point Recruitment?
Starting Point Recruitment has more than 20 years’ experience supplying staff to businesses across Birmingham, Walsall and the West Midlands, from offices on Lichfield Street in Walsall and Newhall Street in Birmingham.
SPR’s temporary recruitment service provides screened temps for absence cover, seasonal peaks, projects and temp-to-perm roles in warehousing, manufacturing, hospitality, driving, healthcare and office work. For long-term hires, SPR also offers permanent recruitment.
Plan Your 2027 Temporary Staffing Costs With SPR
If you want to understand what the April 2027 rates mean for your temp charge rates, speak to our team. Call our Birmingham office on 0121 227 5444 or our Walsall office on 01922 661 344, or contact us online. We work with employers across Birmingham, Walsall and the wider West Midlands.
