Annualised Hours and minimum wage

MelodieMoonbeam

Hi, hoping someone can help. My son is on minimum wage on an annualised hours contract, the average working week is calculated at 39 hours over the year split into 12 equal payments, but he works more than this weekly and not on an overtime rate. So in essence his monthly wage broken down means he works hourly for less than minimum wage, is this legal? He will hit the annualised hours limit at some point in November and then each hour will be paid at an overtime rate, I am sure he is losing out. Any assistance on this would be great. Thank you

Marcon

MelodieMoonbeam said:

Hi, hoping someone can help. My son is on minimum wage on an annualised hours contract, the average working week is calculated at 39 hours over the year split into 12 equal payments, but he works more than this weekly and not on an overtime rate. So in essence his monthly wage broken down means he works hourly for less than minimum wage, is this legal? He will hit the annualised hours limit at some point in November and then each hour will be paid at an overtime rate, I am sure he is losing out. Any assistance on this would be great. Thank you

He has to be paid the minimum wage for any pay period - and a pay period cannot be longer than 31 days. 

See https://www.gov.uk/national-minimum-wage/employers-and-the-minimum-wage and https://checkyourpay.campaign.gov.uk

Xbigman

How is he losing out? 
Annualised hours means working different hours during the year, but being paid the same. So if he works 50 hours a week during the summer but his contract is for 40 hours then he gets paid for 40 hours. At some point he should have some weeks where he works less than 40 hours, but still gets 40 hours pay. At the end of the year it should work out right, but it often doesn't.
In your son's case the employer pays overtime but he has to complete the annualised hours first. So in November when the annualised hours are all completed he would get his normal weeks pay and every hour he works would then attract overtime pay. If he continues with his normal hours then effectively he's on double pay for those over hours weeks. I don't see that he is losing out if thats whats happening. However there is usually a reason for this kind of contract so there really should be some short hours somewhere to balance this up. 
I also believe this is legal because I've seen similar contracts elsewhere although working time regulations can be an issue, as can calculating holiday entitlements if the extra hours include extra days for part of the year. You haven't said anything to indicate these are issues.

That said, the HGV drivers where I work use this sort of system and you might have noticed it's been a bit of a year for the transport sector. All their timebanks are loaded with owed hours and lots of drivers are asking for time back, and not getting it.
There's going to be a hell of an overtime bill to pay at some point and your son may also be in a one off situation this year that looks worse than it really is.


Darren

Marcon

Xbigman said:

Annualised hours means working different hours during the year, but being paid the same. So if he works 50 hours a week during the summer but his contract is for 40 hours then he gets paid for 40 hours. At some point he should have some weeks where he works less than 40 hours, but still gets 40 hours pay. At the end of the year it should work out right, but it often doesn't.

Which is why it isn't OK. A year is rather longer than the maximum permitted pay period of 31 days - and that's the basis on which minimum wage payments are measured.