3. 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 (eg 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 £6.31 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 £1,072.70 a month (£1,072.70 divided by 170 makes £6.31) 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.

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