Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

National Minimum Wage Manual

From
HM Revenue & Customs
Updated
, see all updates

Working time: salaried hours work; considering adjustments for leaving employment

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 29
* before 6 April 2015; National Minimum Wage Regulations 1999, regulation 23

General

The hours to be treated as worked in each pay reference period (NMWM09010) for a worker performing salaried hours work is based on a calculation using the worker’s basic hours (NMWM08030). This calculation enables annualised hours in a calculation year (NMWM08040) to be treated as being worked evenly throughout a year. However, when a worker starts (NMWM08050) or ends their employment it is necessary to ensure that any part worked pay reference period is taken into account.

Worker leaves employment

Where a worker leaves their employment or ceases salaried hours work part way through a calculation year it is necessary to re-calculate the basic hours up to the point of their leaving to determine whether they have worked more than the basic hours for the part year.

If prior to them ceasing salaried hours work a worker has already worked in excess of their basic hours the time to be treated as worked will already be subject to adjustment as described in NMWM08100.

If however, the worker has not worked in excess of their basic hours up to the point of leaving, the following pro-rata calculation is performed to adjust the time treated as worked for the shortened, final pay reference period:

B x      N   
         365

Where

B is the worker’s basic hours (NMWM08030), and

N is the number of days in the shortened, final pay reference period.

Where the worker works the full pay reference period then there is no need to adjust the time treated as worked.

Example 1: calculating hours worked in a shortened pay reference period

A monthly paid worker performing salaried hours work has a calculation year from 1 April to 31 March with 2080 basic hours.

The worker leaves employment on 12 October.

  • The time treated as worked for each full pay reference period is 173.33 hours (173 hours 20 minutes) based on the calculation, 2080 ÷ 12 (NMWM08035)
  • The number of days in the final pay reference period is 12 based on the period 1 October to 12 October inclusive.
  • The time treated as worked for the shortened, final pay reference period is;

2080 x       12      = 68.38 hours
                     365

Expanded form of this example calculation (Excel 28kb).

Comparison of adjusted basic hours against actual time worked

Once the time treated as worked in the final pay reference period has been established it is necessary to add these hours to the total basic hours for the calculation year up to the point of leaving. This will allow for a comparison to be made of the total actual hours worked in the calculation year to the adjusted basic hours (NMWM08100). Any hours worked in excess of the adjusted basic hours should be paid in addition to the adjusted basic hours in the final pay reference period.

Example 2: checking final basic hours on ending salaried hours work

In example 1 above, as the worker will no longer be performing salaried hours work, the total basic hours for the calculation year up to point of leaving is 1108.38 hours (1040 hours for 1 April to 30 September (i.e. 6 months of 173.33 hours (173 hours 20 minutes)) and 68.38 hours for the period 1 October to 12 October).

If the worker had actually worked a total of 1150.25 hours in the calculation year, this is more than the adjusted basic hours and the difference (i.e. excess) between the total hours worked and the adjusted basic hours must be paid with the pay for the final pay reference period.

This means that the worker should be paid at least national minimum wage for 110.25 hours (i.e. 68.38 hours treated as worked in the final pay reference period plus the excess 41.87 hours representing the difference between the total hours worked in the calculation year 1150.25 and the adjusted basic hours 1108.38).

For more information regarding considering excess hours worked for salaried hours work see NMWM08110.