Minimum wage for different types of work

Paid an annual salary

A worker is doing ‘salaried hours’ work if they’re paid:

  • a set basic number of hours each year under their contract
  • an annual salary in equal weekly or monthly amounts

Salaried hours workers’ contracts might not state the basic number of hours as an annual figure, but it must be possible to work this out. Workers and employers can then use this figure to make sure the rate of pay is at least the minimum wage.

Work out the hourly rate

  1. Find the basic annual hours in the worker’s contract.

  2. Divide this by the number of times they get paid each year (for example 12 if they get paid monthly) - this gives you the average number of hours covered by each pay packet.

  3. Divide the amount they get in each pay packet by this number (average hours). This gives you the worker’s hourly rate.

Example

Jeba’s contract says she must work 2,040 hours each year.

She’s eligible for the minimum wage rate of £7.38 per hour.

She gets paid monthly (12 times a year), so each pay packet covers an average of 170 hours (2,040 divided by 12).

This means she must be paid at least £1,254.60 a month (£1,254.60 divided by 170 makes £7.38) for the basic hours in her contract.

Use the National Minimum Wage calculator to check if a salaried hours worker is being paid at least the minimum wage.

Extra hours

Employers must pay at least the minimum wage for any hours worked in addition to what’s agreed in the worker’s contract.

  1. Step 1 Check your business is ready to employ staff

  2. Step 2 Recruit someone

    You need to advertise the role and interview candidates. You can use a recruitment agency to do this or do it yourself.

    1. Find out about recruiting someone yourself on Acas
    2. Find out about using a recruitment agency

    As an employer you must make sure you recruit employees fairly.

    1. Avoid discrimination during recruitment
    2. Make your application process accessible for employees with disabilities or health conditions
  3. and Find out if they need a DBS check

    You may need to check someone's criminal record, for example, if they'll be working in healthcare or with children.

    1. Find out if you need a DBS check
    2. How to do a DBS check
  4. Step 3 Check if they need to be put into a workplace pension

    Check if you need to put your employee into a workplace pension scheme:

  5. Step 4 Agree a contract and salary

  6. Step 5 Tell HMRC about your new employee