Calculating the National Minimum Wage
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23.4.2010 Calculating the National Minimum Wage where a worker always receives overtime or shift payments
In the case of Hamilton House Medical Ltd v Hillier, the EAT considered whether Mrs Hillier had received the national minimum wage (“NMW”). Mrs Hillier worked in a care home and normally worked only at night and at weekends. Her basic rate of pay was below the NMW but she received enhanced rates of pay consisting of time and a third for working at night during the week, and time and two-thirds at weekends. She submitted a claim under the National Minimum Wage Regulations 1999. At Tribunal, it was decided that Hamilton House Medical was in breach of the NMW because Mrs Hillier’s basic rate of pay was below the NMW minimum rate. On appeal the employer argued that, where an employee is always paid at premium rates, those rates become the employee’s basic rate and, as a result, the pay was above the NMW. The question in this case related to what the lowest rate is when the worker is only ever paid at the enhanced rate? The EAT decided that this meant the basic wage under the contract, even if the worker in question only worked at times when they received enhanced pay. The appeal was therefore dismissed. Following the decision in this case, it is important that employers and employment businesses ensure that any enhancements for shift or overtime work are not taken into account when calculating a worker’s hourly pay for the purposes of NMW.
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