Legal Article - Employment Law

Pay Reference Period

The worker does not have to be paid the NMW for each hour worked, but he/she must be paid the NMW on average for the time worked in the pay reference period.
This is usually the period of time for which a worker’s wage is actually calculated i.e. daily, weekly, or monthly. This is the longest pay period allowed under the NMW rules, even if someone is paid over a longer period.

The pay that is allocated to a pay reference period is:

• Pay received during that period, and
• Pay earned in that period, but which is not received until the next period e.g. a worker may earn extra bonus towards the end of the current period that is paid in the next period. In this case the NMW will not be known until the end of the next.

There are special rules for worker’s receiving an annual bonus or whose pay is based on time sheets.

Published: 27 May 2011

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