National minimum wage rates: estimating to find the average hourly output rate
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, regulations 42(2)(b) & 42(4) * before 6 April 2015; National Minimum Wage Regulations 1999, regulation 26A (1)(b), (3) & (4)
In certain circumstances an employer can make an estimate of the average hourly output rate (NMWM03150) for rated output workers making a particular piece or performing a particular task. He must have already tested (NMWM03160) and established the average hourly output rate for either:
- another piece or task reasonably similar to the one in question, or
- the same piece or task, but the test was carried out in different working circumstances.
The employer can make a fair adjustment to the average hourly output rate previously established to take into account the differences between the pieces (or tasks) or the new conditions. For example, an employer may have tested factory workers making the same item as homeworkers. He can make a reasonable adjustment to the original test result to determine the average hourly output rate for the homeworkers.
It is for employers to judge when pieces or tasks are similar, when circumstances differ and what is a fair estimate. However, ultimately only the courts can decide and the burden of proof would fall on the employer. Employers must be able to justify their decisions and must retain sufficient documentation to validate their results.
If an estimate is used to find the average hourly output rate, that rate only applies to the particular piece or task in question. That estimate cannot then be used to replace an actual test when estimating average hourly rates for further pieces or tasks. When making an estimate the employer must always be able to refer back directly to a test.
The employer should re-estimate from time to time as necessary to account for any relevant changes. However, the employer is not obliged to re-estimate simply because the number or identity of workers changes over time unless he has reason to believe that the changes significantly affect the average hourly output rate.