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HMRC internal manual

National Minimum Wage Manual

Types of work: unmeasured work - daily average agreement

Relevant legislation

The legislation that applies to this page is as follows:

  • National Minimum Wage Regulations 2015, regulations 49 & 50

When engaging a worker performing unmeasured work an employer must either pay;

  • For every hour worked by the worker in a pay reference period, or
  • The time specified in a written daily average agreement.

The daily average agreement is a written agreement with the worker which sets out the average number of hours that the worker is likely to spend each day in doing the tasks assigned to him provided he is available to carry out his duties that day for the full amount of time expected under his contract. For example, a worker may work an average of 4 hours within a 6 hour period.

For the agreement to be valid it must:

  • Be signed by the worker and employer
  • Be made before the start of the pay reference period to which it relates
  • Set out the daily average number of hours (the ascertained hours) the worker is likely to spend each day performing the work provided to them.

If a valid daily average agreement exists then the worker must be paid the national minimum wage for the ascertained hours for each day worked.

If a valid daily average agreement does not exist then the employer must pay the worker for every hour actually worked in the pay reference period.

If a valid daily average agreement exists but the worker is only available for a part of the agreed time on a particular day the ascertained hours form the basis for calculating the hours worked (NMWM07140).

The ascertained number of hours recorded in the daily average agreement must be a reasonable estimate. If the employer cannot demonstrate that the average hours are reasonable by providing supporting evidence then the daily average agreement will not be valid (NMWM07130). A daily average agreement can cover a number of pay reference periods if there is no change in the average number of hours.

A daily average agreement is solely for national minimum wage purposes and does not vary the worker’s contract.