NMWM08090 - Working time: salaried hours work: considering adjustments where contract varied more than once
Relevant legislation
General
Calculating basic hours where salaried hours contract varied more than once
Example: adjusting basic hours where contract varied more than once
Comparison of adjusted basic hours against actual time worked
Relevant legislation
The legislation that applies to this page is as follows:
- National Minimum Wage Regulations 2015, regulation 25
General
The hours to be treated as worked in each pay reference period (NMWM09010) for a worker performing salaried hours work is based on a calculation using the worker’s basic hours (NMWM08030). This calculation enables annualised hours in a calculation year (NMWM08040) to be treated as being worked evenly throughout a year. However, where a worker’s contract is varied during the course of the calculation year, so that the hours under the contract are increased or reduced, it is necessary to adjust the basic hours for the calculation year to reflect the variation.
Where the contract is varied so that the worker ceases performing salaried hours work the adjustment to the basic hours is applied as if the worker ceases work (NMWM08060).
Calculating basic hours where salaried hours contract varied more than once
Where a worker performing salaried hours work has a variation to their contract, it is necessary to perform a pro-rata calculation to identify the adjusted basic hours (NMWM08060). If a further variation occurs, the previous calculation is re-calculated to reflect the period it covered and a further calculation is required for each subsequent variation, such as;
B3 x D3
365
Where:
B3 is the worker’s further revised basic hours, and
D3 is the number of days for which the further revised basic hours apply.
Example: adjusting basic hours where contract varied more than once - monthly example
The worker in the example in NMWM08080 has a further variation to the contract, resulting in the basic hours increasing to 1950 hours from 1 February.
It is therefore necessary to pro-rata the basic hours relating to the first variation because the period subject to that variation has now changed from 1 January to 31 March (90 days) to 1 January to 31 January (31 days). The 90 day calculation shown as b. in NMWM08080 is therefore changed to a new b2. calculation using 31 days to reflect the further variation from 1 February;
b2. 1820 x 31 = 154.58 hours
365
A further calculation is then needed to determine the basic hours attributable to the period affected by the second variation, 1 February to 31 March (59 days);
c. 1950 x 59 = 315.21 hours
365
Therefore the adjusted basic hours for the calculation year to take account of the further variation from 1 February will be 2036.91 hours (the total of a. 1567.12 hours (from NMWM08080), b2. 154.58 hours and c. 315.21 hours).
If there are no further variations in the calculation year, the time treated as worked in each pay reference period will be;
- 173.33 hours (173 hours 20 minutes) for the months April to December based on the calculation, 2080 ÷ 12, and
- 151.67 hours (151 hours 40 minutes) for the month of January based on the calculation 1820 ÷ 12 (i.e. the calculation that resulted from the first variation, see NMWM08080), and
- 162.50 hours (162 hours 30 minutes for the months following the second variation, February to March based on the calculation, 1950 ÷ 12
Example: adjusting basic hours where contract varied more than once - two-weekly example
The worker in the example in NMWM08080 has a further variation to the contract, resulting in the basic hours increasing to 1950 hours from 7 February.
It is therefore necessary to pro-rata the basic hours relating to the first variation because the period subject to that variation has now changed from 11 January to 4 April (84 days) to 11 January to 6 February (27 days). The 84 day calculation shown as b. in NMWM08080 is therefore changed to a new b2. calculation using 27 days to reflect the further variation from 7 February;
b2. 1820 x 27 = 134.63 hours
365
A further calculation is then needed to determine the basic hours attributable to the period affected by the second variation, 7 February to 4 April (57 days);
c. 1950 x 57 = 304.52 hours
365
Therefore the adjusted basic hours for the calculation year to take account of the further variation from 7 February will be 2040.47 hours (the total of a. 1601.32 hours (from NMWM08080), b2. 134.63 hours and c. 304.52 hours).
If there are no further variations in the calculation year, the time treated as worked in each pay reference period will be;
- 80 hours for the period 5 April to 9 January based on the calculation, 2080 ÷ 26, and
- 70 hours for the period 10 January based on the calculation 1820 ÷ 26 (i.e. the calculation that resulted from the first variation, see NMWM08080), and
- 75 hours for the period following the second variation from 7 February to 4 April based on the calculation, 1950 ÷ 26
Expanded form of this example calculation (Excel 32kb).
Comparison of adjusted basic hours against actual time worked
Any checks regarding whether the worker has actually worked excess hours (NMWM08100) in a calculation year and when, will be based on the adjusted annual basic hours following the variation.