Minimum wage for different types of work

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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

  1. Find the basic annual hours in the worker’s contract.

  2. 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.

  3. Divide the amount they get in each pay packet by this number (average hours). This gives you the worker’s hourly rate.

Example

Jeba’s contract says she must work 2,040 hours each year.

She’s 20 and is eligible for the National Minimum Wage rate of £8.60 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 £1,462 a month (£8.60 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.

Extra hours

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.

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Part of Employ someone: step by step

  1. Step 1 Check your business is ready to employ staff

    1. Prepare your business to take on employees

  2. Step 2 Recruit someone

    You need to advertise the role and interview candidates. You can use a recruitment agency to do this or do it yourself.

    1. Find out about recruiting someone yourself on Acas
    2. Find out about using a recruitment agency

    As an employer you must make sure you recruit employees fairly.

    1. Avoid discrimination during recruitment
    2. Make your application process accessible for employees with disabilities or health conditions

  3. and Check they have the right to work in the UK

    1. Find out how to check an applicant's right to work

  4. and Find out if they need a DBS check

    You may need to check someone's criminal record, for example, if they'll be working in healthcare or with children.

    1. Find out if you need a DBS check
    2. How to do a DBS check

  5. Step 3 Check if they need to be put into a workplace pension

    Check if you need to put your employee into a workplace pension scheme:

  6. Step 4 Agree a contract and salary

    When someone accepts a job offer they have a contract with you as their employer.

    1. Check what the National Minimum Wage is for different ages
    2. Check what the National Minimum Wage is for different types of work
    3. Check what to include in a contract
    4. Agree a written statement of employment particulars

  7. Step 5 Tell HMRC about your new employee

    You must tell HMRC about your new employee on or before their first pay day.

    1. Tell HMRC about a new employee
    2. Get their personal details and P45 to work out their tax code
    3. If you don’t have their P45, use HMRC’s ‘starter checklist’
    4. Check what to do when you start paying your employee