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HMRC internal manual

National Minimum Wage Manual

From
HM Revenue & Customs
Updated
, see all updates

National minimum wage rates: the average hourly output rate

Relevant legislation

The legislation that applies to this page is as follows:

For pay reference periods commencing

* on or after 6 April 2015; National Minimum Wage Regulations 2015, regulation 42
* before 6 April 2015; National Minimum Wage Regulations, regulations 26 & 26A 

To calculate “fair” piece rates (NMWM03130) under the rated output work system, employers must first establish the average hourly output rate (NMWM03160) for the particular piece produced or task performed.

The average hourly output rate is:

  • the average number of pieces or tasks (including fractions)
  • which can be produced or performed in an hour
  • by an average worker
  • of the same employer
  • doing the same or similar work
  • in the same or similar conditions

Establishing the average hourly output rate

To establish the average hourly output rate, an employer can either:

  • carry out a test (NMWM03160) of all his workers (or a representative sample) making a particular piece or performing a particular task, to find their average hourly rate, or
  • in certain circumstances, estimate (NMWM03170) the speed of production or the speed of performance of a particular task

Tests or estimates of the average speed that were done before the rated output work legislation came into force are valid, provided they comply with that legislation.