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HMRC internal manual

National Minimum Wage Manual

Working time: salaried hours work; example of considering excess hours worked in the calculation year

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, regulations 26 to 28
* before 6 April 2015; National Minimum Wage Regulations 1999, regulation 22(3)

Example of considering excess hours

When considering whether a worker has worked excess hours over and above their basic hours it is necessary to consider for each pay reference period the actual hours worked and treated as worked (NMWM08100).

A monthly paid worker has 2080 basic hours in the calculation year 1 January 2014 to 31 December 2014.

To identify the time treated as worked for each pay reference period divide the basic hours by 12:

  • 2080 ÷ 12 = 173.33 hours (173 hours 20 minutes)

As long as the worker does not exceed the basic hours in the calculation year, the employer must pay at least national minimum wage for 173.33 hours per month regardless of the time the worker actually spends working.

For example;

  • In April, the worker actually worked his standard contractual hours, 9:00 to 5:00, Monday to Friday each weekday of the month (22 days).

The time counted for excess hours purposes is 176 hours (22 days of 8 hours)

As the cumulative excess hours of 176 are less than the basic hours for the calculation year (2080) no excess hours calculation is required for this pay reference period. For NMW purposes the worker must be paid at least national minimum wage for 173.33 hours.

  • In May, the worker took a week off at the beginning of the month and returned to work and worked several longer days to prepare for an important presentation. No payment was made for the additional 10 hours worked.

The time counted for excess hours purposes is: 186 hours;

* 17 days of 8 hours (136 hours),
* 5 days holiday at 8 hours per day (40 hours) and
* unpaid additional time (10 hours).

As the cumulative excess hours of 362 (176+186) are less than the basic hours for the calculation year (2080) no excess hours calculation is required for this pay reference period. For NMW purposes the worker must be paid at least national minimum wage for 173.33 hours.

  • In June, the worker continued to work several longer days as well as being absent due to sickness for 4 days, only 1 of which was paid. On return to work the worker spent a total of 6 hours travelling to and from delivery of a presentation. All the travelling took place outside normal working time. No payment was made for the additional time spent working the longer days, totalling 10 hours.

The time counted for excess hours purposes is: 184 hours;

* 17 days of 8 hours (136 hours),
* 4 day sick absence at 8 hours per day (32 hours)
* unpaid additional time (10 hours), and
* hours travelling outside normal working time (6 hours).

As the cumulative excess hours of 546 (176+186+184) are less than the basic hours for the calculation year (2080) no excess hours calculation is required for this pay reference period. The unpaid absence is ignored for the purposes of considering the excess hours against the basic hours.

However, the hours treated as worked for national minimum wage purposes are reduced by the hours relating to the three days of unpaid absence (NMWM08070) so the hours for which the worker must be paid as least national minimum wage are 149.33 hours (173.33 less 24 hours unpaid absence).

  • In July, the worker worked his standard contractual hours, 9:00 to 5:00 but the employer recognised that the worker had been working more hours than usual and gave 3 days time off in lieu. Time off in lieu is simply time not worked, see NMWM08550.

The time counted for excess hours purposes is 160 hours (20 days of 8 hours)

As the cumulative excess hours of 706 (176+186+184+160) are less than the basic hours for the calculation year (2080) no excess hours calculation is required for this pay reference period. For NMW purposes the worker must be paid at least national minimum wage for 173.33 hours.

Expanded form of this example calculation (Excel 33kb).

Only when the worker’s cumulative excess hours exceed the basic hours for the calculation year is it necessary to perform any additional calculation to take account of those excess hours (NMWM08130).