NMWM08130 - Working time: salaried hours work: excess hours calculation in pay reference period where basic hours first exceeded
Source: gov.uk (2025-09-19)


Relevant legislation (#IDALQ0RC)General (#IDAFR0RC)Calculation where basic hours first exceeded (#IDACT0RC)Example: calculation in pay reference period where basic hours first exceeded (#IDAOW0RC)

Relevant legislation

The legislation that applies to this page is as follows:
- National Minimum Wage Regulations 2015, regulation 23 and 28
General

The hours to be treated as worked in each pay reference period (NMWM09010 (https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nmwm09010)) for a worker performing salaried hours work is based on a calculation using the worker’s basic hours (NMWM08030 (https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nmwm08030)). This calculation enables annualised hours in a calculation year (NMWM08040 (https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nmwm08040)) to be treated as being worked evenly throughout a year.

However, when a worker’s hours (NMWM08110 (https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nmwm08110)) exceed their basic hours in the calculation year it is necessary to adjust the time treated as worked in the remaining pay reference periods to take account of the excess hours.

This adjustment involves two calculations;
- A four step calculation to adjust the time treated as worked in the immediate pay reference period when the basic hours are first exceeded, and
- A subsequent calculation which is repeated for the remaining pay reference periods in the calculation year (NMWM08140 (https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nmwm08140)).
The purpose of the adjustments is to take into account of the fact that all the basic hours in the calculation year have already been worked before the payment of National Minimum Wage for those hours has been made. The adjustments also take into account the fact that additional hours over the basic hours need to also be considered for payment of National Minimum Wage.

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.

This allows us to proceed to Step 1 (calculating the proportion of basic hours in the pay reference period before the basic hours were exceeded and Step 2 (calculating the proportion of basic hours in the pay reference period after the basic hours were exceeded). To do this we use the formula;

B x N365

Where

B is the worker’s basic hours in the calculation year, and

N is the number of days before and after the basic hours were exceeded.

When making the Step 1 calculation, any absences during the pay reference period which formed part of the basic hours but where less than the normal salary was paid are subtracted from the final result (NMWM08070 (https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nmwm08070)). There are no absences to subtract from the Step 2 calculation result because those hours have already been worked over the pay reference periods before the excess occurs.

Step 3 is the identification of the number hours of hours actually worked and treated as worked (NMWM08110 (https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nmwm08110)) which fall in the period after the basic hours were exceeded.

Step 4 is the sum of the totals from the previous three steps. This will present the hours treated as worked in the pay reference period. This is perhaps best illustrated by means of an example.