NMWM08080 - Working time: salaried hours work: considering adjustments where contract varied once
Relevant legislation
General
Calculating basic hours where salaried hours contract varied
Example: adjusting basic hours where contract varied
Comparison of adjusted basic hours against actual time worked
Relevant legislation
The legislation that applies to this page is as follows:
- National Minimum Wage Regulations 2015, regulation 25
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, where a worker’s contract is varied during the course of the calculation year, so that the hours under the contract are increased or reduced, it is necessary to adjust the basic hours for the calculation year to reflect the variation.
Where the contract is varied so that the worker ceases performing salaried hours work the adjustment to the basic hours is applied as if the worker ceases work (NMWM08060).
Calculating basic hours where salaried hours contract varied
Where the worker continues to perform salaried hours work but the contract is varied, it is necessary to adjust the basic hours for the calculation year using a pro rata calculation as follows;
- the proportion of the basic hours attributable to the period from the start of the calculation year up to the day before the contract is varied, and
- the proportion of the basic hours attributable to the period[s] following the variation for the remainder of the calculation year.
The adjusted basic hours for the calculation year will be the total of a. and b.
a is calculated using the formula
B1 x D1
365
Where:
B1 is the worker’s original basic hours (NMWM08030), and
D1 is the number of days in the calculation year for which the original basic hours apply.
b is calculated using the formula
B2 x D2
365
Where:
B2 is the worker’s revised basic hours, and
D2 is the number of days for which the new basic hours apply.
If a contract is varied again, i.e. more than once, it is necessary to re-visit calculation b. from the date of the new variation (NMWM08090).
Example 1: adjusting basic hours where contract varied - monthly example
A monthly paid worker performing salaried hours work has a calculation year from 1 April to 31 March with 2080 basic hours.
From 1 January, the worker’s contract is reduced to 1820 basic hours.
The proportion of the basic hours attributable to the period from the start of the calculation year to the day before the variation, 1 April to 31 December (275 days) is;
a. 2080 x 275 = 1567.12 hours
365
The proportion of the basic hours attributable to the period following the variation, 1 January to 31 March (90 days) is;
b. 1820 x 90 = 448.77 hours
365
Therefore the adjusted basic hours for the calculation year from the 1 January variation will be 2015.89 hours (the total of a. 1567.12 hours and b. 448.77 hours).
If there are no further variations in the calculation year, the time treated as worked in each pay reference period will be;
- 173.33 hours (173 hours 20 minutes) for the months April to December based on the calculation, 2080 ÷ 12 (NMWM08035), and
- 151.67 hours (151 hours 40 minutes) for the months following the variation, January to March based on the calculation, 1820 ÷ 12
Example 2: adjusting basic hours where contract varied - two-weekly example
A two-weekly paid worker performing salaried hours work has a calculation year from 5 April to 4 April with 2080 basic hours.
From 11 January, the worker’s contract is reduced to 1820 basic hours.
The proportion of the basic hours attributable to the period from the start of the calculation year to the day before the variation, 5 April to 10 January (281 days) is;
a. 2080 x 281 = 1601.32 hours
365
The proportion of the basic hours attributable to the period following the variation, 11 January to 4 April (84 days) is;
b. 1820 x 84 = 418.85 hours
365
Therefore the adjusted basic hours for the calculation year from the 11 January variation will be 2020.17 hours (the total of a. 1601.32 hours and b. 418.85 hours).
If there are no further variations in the calculation year, the time treated as worked in each pay reference period will be;
- 80 hours for the period 5 April to 10 January based on the calculation, 2080 ÷ 26 (NMWM08035), and
- 70 hours for the period following the variation, 11 January to 4 April based on the calculation, 1820 ÷ 26
Calculating basic hours where arrangement changes to salaried hours contract
Where a contract is varied so that the worker starts performing salaried hours work part way through the calculation year, for example changing from time work to salaried hours work, the basic hours for the calculation year are identified using a pro rata calculation for the remainder of the calculation year. This is achieved by performing the second half (b. portion) of the above calculation from the date they commenced performing salaried hours work.
Comparison of adjusted basic hours against actual time worked
Any checks regarding whether the worker has actually worked excess hours (NMWM08100) in a calculation year and when, will be based on the adjusted annual basic hours following the variation.