Paid an annual salary
Most people paid an annual salary are classed as doing ‘salaried hours work’.
To find out if they are getting the minimum wage you must work out how many basic hours they work in return for their salary.
Someone is usually doing salaried hours work if all of the following apply:
- their contract states how many hours they must work in return for their salary (their basic hours)
- they’re paid in equal, regular instalments through the year, for example monthly or every 4 weeks
- there is no more than a month between each payment
- they do not get paid more than once a week
If someone is paid monthly they do not need to be paid exactly the same amount each month, but they must get the same total amount every 3 months (each quarter of the year).
Salaried hours workers’ contracts might not state the total number of basic hours the worker must work over the entire year, but you must be able to work this out from the contract.
For example, if a contract states the days of the week someone is expected to work and the basic hours for each day, you can use this to work out the total basic hours someone is expected to work over the year.
You can then use this figure to make sure the rate of pay is at least the minimum wage.
Work out the hourly rate
Find the basic annual hours in the worker’s contract.
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.
Divide the amount they get in each pay packet by this number (average hours). This gives you the worker’s hourly rate.
Jeba’s contract says she must work 2,040 hours each year.
She’s 22 and is eligible for the National Minimum Wage rate of £10.18 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 £1,730.60 a month (£10.18 multiplied by 170) for the basic hours in her contract.
If you know how many basic hours someone works for each payment they get, you can use the National Minimum Wage calculator to check if they’re paid the minimum wage.
Employers must pay at least the minimum wage for any hours worked in addition to what’s agreed in the worker’s contract.
Other salaried workers
Some people paid a salary may not be salaried hours workers, for example if there is more than a month between each payment.
These people are usually classed as doing ‘time work’ when working out if they are paid minimum wage or not.