Types of work: salaried hours work - pay intervals
The legislation that applies to this page is as follows:
- National Minimum Wage Regulations 2015, regulation 21(5)
For a worker to be performing salaried hours work (NMWM07020) they must be working under a contract to do salaried hours work and meet all the necessary conditions (NMWM07025). One of those conditions is that a worker must be paid his annual salary either:
- In equal weekly or monthly instalments, or
- By varying monthly instalments but with the result that the worker is paid an equal amount in each quarter.
There are certain limited circumstances when this rule does not apply and salaried hours work can still be applicable. These exceptions are when:
- The worker receives a performance bonus (NMWM07034);
- The employment starts and/or ends resulting in a proportionate amount of the annual salary being paid that week or month;
- The worker’s annual salary for his basic hours is varied. For example because the worker receives a pay rise;
- A worker is paid for extra hours worked which are in addition to the basic hours he is contracted to work. The extra pay received and extra hours worked will be included in any national minimum wage calculations.
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Establishing the worker’s pay intervals
It should be relatively straightforward to decide the pattern by which a worker is paid.
A worker can be doing salaried hours work:
- Where the basic hours have been established (NMWM07030) and a contract specifies that they will be paid an annual salary in equal monthly or weekly payments, the same amount should be paid each month/week regardless of how many hours or days are actually worked in a particular month or week. For example, the same monthly amount is paid for February which has fewer working days than March.
- If they are paid in a monthly pay pattern where the monthly amounts paid vary but result in equal amounts being paid in total each quarter. For example a worker is paid £2000, £2000 and £2500 in consecutive months throughout the year. Although the payments vary each month, the total paid each quarter is always £6500.
Where a contract specifies that a worker is paid their salary in any other pattern, (for example, every 4 weeks, per term for 3 terms each year or per fortnight) then salaried hours work is not appropriate.
Where a worker is paid weekly, they will not be performing salaried hours work if:
- Their salary has been divided by 52 and is paid to cover the work done in only 52 weeks of the year, or
- They are simply paid a set amount for working a set number of hours per week.
This is because in both these circumstances the weekly payments would not cover the total basic hours in the full calendar year for which the worker was entitled to be paid his annual salary.(see examples at NMWM07030)