NMWM08134 - Working time: salaried hours work: excess hours calculation in pay reference period where basic hours first exceeded: four-weekly 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 four-weekly paid worker performing salaried hours work has a calculation year from 1 April to 31 March with 2080 basic hours (resulting in 13 periods of 160 hours being treated as worked in each pay reference period).
By 27 February the worker exceeds the basic hours by working ten 9-hour days (180 hours) in that pay reference period. This results in a cumulative total of 2094 hours counted towards excess hours in the calculation year.
The 160 hours originally treated as worked is no longer representative of working time because the annual basic hours have 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, 3 February to 26 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 two days of 8 hours prior to 27 February, the 136.77 hours would be reduced to 120.77.
Step 2. Calculate the proportion of basic hours falling AFTER the basic hours are exceeded - 27 February to 1 March (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 6 hours on 27 February and 9 hours each on 28 February to 1 March, totalling 33 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 this four-week period: 192.56 (136.77 + 22.79 + 33).
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 160 to 192.56 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).