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HMRC internal manual

National Minimum Wage Manual

From
HM Revenue & Customs
Updated
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Pay reference periods & elements of pay: payments made in one pay reference period but treated as made in another

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 9(1)(b) & (c)
* before 6 April 2015; National Minimum Wage Regulations regulation 31(1)(a)

In certain circumstances, a payment made in one pay reference period for work done in an earlier pay reference period can be reallocated to the pay reference period in which the work was actually performed (NMWM09050).

In these cases, the amount paid counts towards the worker’s total remuneration in the earlier pay reference period when the work was actually done. However, the same amount cannot be counted towards national minimum wage pay twice in two separate pay reference periods. Therefore, although it is initially included in the worker’s total remuneration in the pay reference period in which it is actually paid, the same amount is then reduced from the worker’s total remuneration in that pay reference period.

If a payment for an earlier pay reference period cannot be reallocated to the period in which the work was performed, then the amount counts towards the worker’s total remuneration in the pay reference period in which it was actually paid. In these cases, the amount paid has only been counted in one pay reference period and no further reduction is required when calculating the worker’s national minimum wage pay.

For example, a worker is paid £800 each month. He works overtime in June for which he is paid £50 in July. The payment for the overtime is reallocated so that it counts towards the worker’s total remuneration in June. The worker’s total remuneration is therefore initially£850 for both months. However, under national minimum wage legislation the same payment cannot be counted towards national minimum wage pay twice and the worker’s total remuneration in July must be reduced by £50. The worker’s national minimum wage pay is therefore £850 in June and £800 in July.

If the work for June’s overtime had been paid in August, then the £50 could not have been reallocated back to June when the work was performed. The payment for the overtime would have counted to the worker’s total remuneration when it was paid in August. There would have been no corresponding reduction and the worker’s national minimum wage pay would have been £800 for June and July and £850 for August.