National Minimum Wage – Meaning of Work

National minimum wage inspections have a reputation for being particularly aggressive in enforcing the letter of the law. While the premise of the rules seems to be logical, the rules are not always easy to follow, and good-intentioned employers can easily be caught out, with some rather unpleasant consequences.

This is the first in a short series of short blogs where we dive into some of the complex areas of NMW, with this first blog covering hours worked.

The rules require an employee to be paid at or above the minimum wage on average for time worked over a pay reference period, not to be paid the minimum wage for each hour worked.

The total of pay for a pay reference period has to be divided by the number of hours of work in that pay reference period, and the result compared with the appropriate minimum hourly rate. So, what is included as hours worked for NMW purposes?

In this article, we cover the two main types of worker:

Salaried Hours work

Ordinarily, basic hours are calculated in accordance with the employment contract. The hours to be included are:

• Hours at work working, and hours required to be at work
• Hours spent training when the employee would otherwise be at work (but not travel to the training from home)
• Hours the employee is available at or near a place of work (on-call/standby)
• Hours spent travelling for business. However, there are some caveats to this statement. Travel from home to a normal place of work and vice versa does not count, as this is just ordinary commuting. The same applies to home-to-work travel, where there is no fixed/habitual place of work. Travelling to carry out work, including travel between assignments for the purpose of carrying out work, is included.
• Hours performing sleep-in shifts where the employee is expected to perform activities for all or most of the shift, and where the employee can sleep during tasks. Hours include the sleeping hours.

Hours not included are:

• Hours not worked and paid at less than normal pay, e.g. paying an employee half pay after 6 weeks of sick leave.
• Hours during unpaid leave.
• Hours when the employee is undertaking industrial action.
• Hours the employee is available at or near a place of work (on-call/standby) if they are at home.
• Hours performing sleep in shifts where the employee is expected to sleep for all or most of the shift, unless the employee is awake for the purposes of working, in which case only the awake hours are included. The employer must provide sleeping facilities for the time sleeping to not count as working hours, otherwise, even sleeping time will be included.

Unmeasured work

There are two ways to count hours for NMW purposes. The options are:

• Recording every hour worked or treated as worked
• Coming to a ‘daily average’ agreement of hours to be worked

The daily average requires mutual agreement between the employer and the employee and a realistic estimate of the daily average number of hours to be worked.

For more information, please contact our expert team.

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