NMW for part month starters and leavers who are salaried paid

We will have employees being paid at the NMW for the first time from the 1st April. These staff are salaried staff paid monthly. We have concerns about part month starts/leavers. In the example below, someone paid the NMW salary, starting in a 23 working day month (such as May), would see a calculation similar to the below when using a working days in month calculation. (£1841.33 / 23) x 6 = £480.35 When you calculate that payment amount against the amount of hours worked in that period (the example is someone starting on Friday the 24th May), the calculation would be under the NMW for the period of 24th May to 31st May. I know that the NMW legislation states the following: “Salaried hours work can exist in any sector or occupation. Many office workers, public sector workers and workers at large companies are paid on the basis of a salaried hours contract. So long as the instalments remain the same, the fact that workers actually work more hours in some weeks or months and less in others does not prevent them being salaried hours workers. Some variations in the weekly or monthly instalments are ignored for this purpose, where paying in equal instalments may not be practicable. For example, if the variation results from the worker starting or leaving part way through the week or month.” Where would we stand with this based on my above example? Would we be in breach of the NMW, or would we apply the pay reference period for 31 days after the start date? When looking at the above example, if you examine the hours they work and the pay they receive from a 31 day reference period from their start date, the pay they receive for the hours worked in that 31 day period equates to an hourly rate of over the NMW of £11.44 from April. If someone is able to confirm that the above understanding is correct, please could you clarify if there is a risk whereby someone starts and then subsequently leaves within 31 days. Would we need to do an assessment in these circumstances to ensure that the hours worked average out to ensure that the NMW has been paid for those hours worked?

Hi,

We cannot comment on an employer’s specific arrangements without undertaking a full National Minimum Wage investigation. We can only provide general advice and signpost to guidance. If you require advice relating specifically to working arrangements you have in place or are considering introducing, then please seek independent legal advice.

Salaried hours work requires all the following conditions to apply to a worker:

• they are entitled under their contract to be paid for a set basic number of hours in a year,
• they are entitled under their contract to an annual salary for those basic hours,
• they are not entitled under their contract to any other payment for their basic hours other than the salary, or a performance bonus or salary premium,
• they are paid not more often than weekly and not less often than monthly in equal instalments – for example, monthly, 4-weekly, fortnightly or weekly payments. Alternatively, they can be paid in monthly instalments that vary but add up to the same amount in each quarter.

The general approach for identifying the hours to be treated as worked in each pay reference period for salaried hours workers is to divide the worker’s basic annual hours by the number of payments in the year.

If a salaried hours worker leaves before the end of their contractual year, you may find that they have worked more hours than the basic minimum hours for the part of the year that you employed them. You must pay at least the minimum wage for the excess. 

For more information where a salaried worker leaves before the end of the year, please refer to ‘Calculating salaried workers’ hours – workers leaving’ here:

Calculating salaried workers’ hours - excess hours worked

Thank you.