NMWM08131 | Working time: salaried hours work: excess hours calculation in pay reference period where basic hours first exceeded: monthly example

Calculation where basic hours first exceeded

Before the four-step calculation can be made it is first necessary to identify the point in the pay reference period when the basic hours were first exceeded (NMWM08130).

Example: calculation in pay reference period where basic hours first exceeded

A monthly paid worker performing salaried hours work has a calculation year from 1 April to 31 March with 2080 basic hours (resulting in 12 months of 173.33 hours being treated as worked in each pay reference period).

By 25 February the worker exceeds the basic hours by working twenty 9 hour days (180 hours) in that pay reference period. This results in a cumulative total of 2099 hours counted as excess hours in the calculation year.

The 173.33 hours originally treated as worked is no longer representative of time worked as it has been exceeded during the pay reference period. Additional hours therefore need to be taken into consideration.

Step 1. Calculate the proportion of basic hours falling BEFORE the basic hours are exceeded, 1 February to 24 February (24 days);

2080 x 24 = 136.77 hours
365

On completion of this calculation, any absences during the pay reference period which formed part of the basic hours but where less than the normal salary was paid must be subtracted from the final result. For example, if the worker had been absent without pay for one day of 8 hours prior to 25 February, the 136.77 hours would be reduced to 128.77.

Step 2. Calculate the proportion of basic hours falling AFTER the basic hours are exceeded - 25 February to 28 February (4 days);

2080 x 4 = 22.79 hours
365

Step 3. Identify the actual hours worked and treated as being worked in the pay reference period after the basic hours were exceeded.

In this case, this is one hour on 25 February, and 9 hours each on 26 and 27 February, totalling 19.00 hours.

Step 4. Add together the results of steps 1, 2 and 3 to give the adjusted number of hours to be treated as worked in February: 178.56 (136.77 + 22.79 + 19.00).

This means that as a consequence of the excess hours the employer must increase the number of hours treated as worked for National Minimum Wage purposes from 173.33 to 178.56 hours.

If further work is performed in the remaining pay reference periods of the calculation year additional adjustments will be required for those pay reference periods (NMWM08140).