Glossary
Minimum wage
Minimum wage is the lowest hourly or monthly pay an employer can legally pay a worker, set by law in each country or region. Rates vary widely and are updated regularly.
Reviewed by Teamed's in-house employment-law team·Last updated 24 June 2026
What is Minimum wage?
Minimum wage is the lowest rate of pay an employer can legally offer a worker for ordinary hours worked. Governments set it to protect workers from poverty-level pay, and most countries review it annually or biennially. The rate is rarely a single global figure: it varies by country, region, age group, and sometimes sector. In the United States, each state can set a floor above the federal rate. In the UK, rates differ by age band. Germany and Australia each publish one national statutory rate, but Australia's award system means many workers sit above the floor. When you hire internationally, you must apply the minimum wage that governs the worker's location and employment category, not your own home country's rate. Missing this is one of the most common payroll compliance errors in cross-border hiring, and it can trigger back-pay claims, fines, and reputational damage.
Why does minimum wage differ so much between countries?
Each country sets its own floor based on local living costs, economic conditions, and political priorities. Some countries index it to inflation; others use independent commissions. Regional variation within a country adds another layer: a US state like California sets its own rate above the federal floor.
What happens if you pay below the minimum wage?
You owe the worker the shortfall, often with interest or a penalty on top. Regulators in most countries can impose fines, name and shame employers publicly, and in serious cases pursue criminal charges. In the UK, HMRC publishes a quarterly list of employers who have underpaid.
Does minimum wage apply to contractors?
In most countries, minimum wage law covers employees and some dependent workers but not genuinely self-employed contractors. The line between contractor and employee is blurry, though. Misclassifying an employee as a contractor to avoid minimum wage obligations is a recognised enforcement target in most jurisdictions.
How does an Employer of Record handle minimum wage compliance?
When Teamed employs someone on your behalf, Teamed's in-house employment-law team monitors local rates and applies any increase from the effective date. You pay the up-to-date statutory minimum as part of the employment cost, so rate changes do not catch you off guard.
Key facts
- UK National Living Wage (age 21+), from 1 April 2026
- £12.71 per hourUp 4.1% from the previous year. Lower rates apply for workers aged 18-20 (£10.85/hr) and under 18 (£8.00/hr).Source: GOV.UK, National Minimum Wage and National Living Wage rates· verified 2026-06-24
- Germany statutory minimum wage, from 1 January 2026
- €13.90 per hourUp from €12.82 in 2025. Applies to almost all employees; a further rise to €14.60 is planned for 2027.Source: Mercans statutory alert, Germany minimum wage 2026· verified 2026-06-24
- Australia national minimum wage, from 1 July 2026
- AU$26.44 per hour (AU$1,004.90 per week)A 4.75% increase confirmed by the Fair Work Commission. Applies to the first full pay period starting on or after 1 July 2026.Source: Fair Work Ombudsman, Annual Wage Review 2026· verified 2026-06-24
Frequently asked questions
What is the US federal minimum wage in 2026?
The federal rate remains $7.25 per hour, unchanged since 2009. Many states set higher floors: California, New York, and Washington all exceed $16 per hour. You must apply whichever rate is higher for the worker's location.Can I pay a worker less than minimum wage if they agree to it?
No. Minimum wage is a statutory floor; an employee cannot waive it by contract. Any agreement to pay below the legal minimum is unenforceable, and the employer is still liable for the shortfall plus any penalties.Does minimum wage include bonuses or tips?
Rules differ by country. In the UK, tips paid via card cannot count towards minimum wage compliance from October 2024. In the US, employers may count tips against the cash wage only up to a defined credit limit. Always check local rules before assuming supplements fill the gap.How often do minimum wage rates change?
Annually in most countries, though the effective date varies: April in the UK, January in Germany, July in Australia, and variable in US states. Teamed's in-house employment-law team tracks these changes so your payroll updates automatically on the correct date.
Related terms
Note
Glossary
Have a global hiring question?
Ask a real person, or run the numbers yourself with the free calculators.
See what employment really costs by countryLast verified 2026-06-24