How to Calculate National Minimum Wage (Salary Premium) 2020

15-04-2020

Salary Premium explained

With the implementation of the National Minimum Wage (Amendment) (No 2) Regulations 2020 which came in to effect on 6th April 2020, most of the amendments are technical but a few aspects are key and may affect you as an employee or as a business owner.

The new legislation defined a ‘Salary Premium’ in relation to salaried hours workers, which is an amount of pay in addition to the annual salary, or an increase in the rate of pay for particular working hours. This must relate to basic hours and must relate to working. Examples are working times, working days, locations, a particular environment, tasks carried out or certain responsibilities.

Salary Premium is no longer part of the calculation of basic hours or annual salary pay

Where a salaried hours worker receives a defined salary premium (London weighting, bank holiday pay or unsociable hours pay), that amount will no longer be considered part of ‘remuneration’ for the purposes of calculating compliance with National Minimum Wage.

In addition, where workers have to buy goods from their employer such as uniforms or equipment or incur expenditure, then this will not be a reduction for National Minimum Wage purposes if the employer then reimburses the worker. Read more here.

Clarification of pay instalments

Finally, when paying a salaried hours worker, it is now the case that they may be paid in equal instalments - not more often than a weekly basis and not less often than a monthly basis - which provides some certainty.

How do the National Minimum Wage new amendments affect me?

This is only an overview and the topic is fraught with small print. We would advise that should you encounter issues with any of these situations, do take specific advice on your own situation.

The Government’s own website provides useful information and examples to help workers understand whether they are being paid correctly: https://www.gov.uk/national-minimum-wage-rates

If you do get stuck and just want to check that you are complying with the law or actually receiving what you are entitled to, please get in touch and complete our free Contact Us form and we will get in touch as soon as possible.

Useful links:

Government - National Minimum Wage 2020

Uniform purchase - How is it included in the 2020 calculation?

Download our Employment Law Factsheet or our Employment Law services for Employees PDF.

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