Working time: salaried hours work; considering adjustments where contract varied more than once
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 25 * before 6 April 2015; National Minimum Wage Regulations 1999, regulations 22(2) & 23(4)
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 more than once
Where a worker performing salaried hours work has a variation to their contract it is necessary to perform a pro-rata calculation to identify the adjusted basic hours (NMWM08060). If a further variation occurs, the previous calculation is re-calculated to reflect the period it covered and a further calculation is required for each subsequent variation, such as;
B3 x D3
B3 is the worker’s further revised basic hours, and D3 is the number of days for which the further revised basic hours apply.
Example: adjusting basic hours where contract varied more than once
The worker in the example in NMWM08080 has a further variation to the contract, resulting in the basic hours increasing to 1950 hours from 1 February.
It is therefore necessary to pro-rata the basic hours relating to the first variation because the period subject to that variation has now changed from 1 January to 31 March (90 days) to 1 January to 31 January (31 days). The 90 day calculation shown as b. in NMWM08080 is therefore changed to a new b2. calculation using 31 days to reflect the further variation from 1 February;
b2. 1820 x 31 = 154.58 hours
A further calculation is then needed to determine the basic hours attributable to the period affected by the second variation, 1 February to 31 March (59 days);
c. 1950 x 59 = 315.21 hours
Therefore the adjusted basic hours for the calculation year to take account of the further variation from 1 February will be 2036.91 hours (the total of a. 1567.12 hours (from NMWM08080), b2. 154.58 hours and c. 315.21 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 9 months April to December based on the calculation, 2080 ÷ 12, and
- 167.99 hours (168 hours) for the month of January based on the calculation 2015.89 ÷ 12 (i.e. the adjustment that resulted from the first variation, see NMWM08080), and
- 169.74 hours (169 hours 45 minutes for the 2 months, February to March based on the calculation, 2036.90 ÷ 12
Expanded form of this example calculation (Excel 32kb).
Comparison of adjusted basic hours against actual time worked
Any checks regarding whether the worker has actually worked excess hours (NMWM08100) and when, will be based on the final version of the basic hours that applies to the calculation year.