Issuing notices of underpayment: establishing the period of arrears for workers named on a notice
The legislation that applies to this page is as follows:
* National Minimum Wage Act 1998, section 19 * Limitation Act 1980 * Prescription and Limitation (Scotland) Act 1973 * The Limitation (Northern Ireland) Order 1989
For pay reference periods commencing
* on or after 6 April 2015; National Minimum Wage Regulations 2015, regulation 6 * before 6 April 2015; National Minimum Wage Regulations 1999, regulation 10
Determining the start of the arrears
Subject to the limits described below, the period of arrears for each worker starts with the first day of the first pay reference period for which the NMW Officer has determined there are arrears outstanding on the date of contact.
If a worker started work part way through what would become his normal pay reference period, and there are arrears from the start of his employment, the first pay reference period will run from the start date of the worker’s contract.
- If a worker normally had a weekly pay reference period from Saturday to Friday and his contract started on Tuesday, his first pay reference period would run Tuesday to Friday, with subsequent pay reference periods being Saturday to Friday.
Limiting the period of arrears on the notice
In England, Wales and Northern Ireland a notice of underpayment must not show any pay reference period that ends more than 6 years before the date on which the notice is served.
In Scotland a notice of underpayment must not show any pay reference period that ends more than 5 years before the date on which the notice is served.
Determining the end of the arrears
The end of the period of arrears is the last day of the last pay reference period for which arrears can be identified for a worker. The day after the end of the period of arrears is the relevant day (NMWM13150) for that worker.
When arrears extend to the end of a worker’s employment, the arrears will end on the last day of the worker’s final pay reference period. If the worker left work part way through a pay period, his last pay reference period is treated as ending on the date that pay period would normally have ended, regardless of when his contract actually ends or the last day he was actually at work.
- A worker normally had a monthly pay reference period running from the 1st to the last day of each month. His contract ended on 12th December and his last day at work was 8th December. The worker’s last pay reference period would be 1st December to 31st December.
When a worker’s employment ends and re-starts in the same pay period, each contract should be treated as having separate pay reference periods. In these rare circumstances, to avoid potential confusion, the pay reference periods should not overlap and should reflect the contractual arrangements.
- If the worker in the previous example started a new contract on 21st December with the same employer and pay reference period, the worker’s last pay reference period for his initial contract would be 1st December to 12th December and the first pay reference period for the new contract would be 21st December to 31st December.