Please can someone help me understand the rise of the NMW, annual salaries and holiday pay -

[AmaryllisChorus]

I'm so confused. I've looked online but every site says something different and nowhere breaks it down in a way that answers my question.

I've always worked for myself - sole trader, so never had a salary or employed anyone.

The issue is:

DS is 21 and working in his first job out of uni for a small London firm as a trainee manager. Currently on 23k for a 40 hour week. He can take 4 weeks holiday a year.
He reckoned this meant he was on about £11.90ph - over NMW for his age, as he wasn't taking into account the four weeks' holiday. I said that by April, he needs an increase of £795.20 pa or he will be earning under NMW, as it rises for his age group to £11.44ph.

£11.44 x 40 hpw x 52 wpa = £23,795.2

But £11.44 x 40hpw x 48wpa = £21,964.8 - so if the holiday weeks aren't paid at an assumed 40 hours per week, he'll be earning enough.

He doesn't want to ask his boss for a rise, but I said as he is doing 40 hours per week, (10am-7pm with an hour for lunch, 5 days a week) then his boss is legally obliged to up his pay from 1st April.

I think I upset him as he thought he was doing well and now he thinks he may soon be earning under NMW, despite being a trainee manager in a very expensive city. It is an incredibly competitive profession that he has come into, and he is really lucky to have landed the job.

I want him to at very least be paid a legal salary. Am I right or have I completely miscalculated? Should I take the 4 weeks holiday out of the equation?

Thank you, @PercyMcPigface for both your posts.

I'm not creating upset @passiveconstellation. I just suggested he keep track of actual hours worked, because if he habitually works 40hpw or more, then his pay should go up on April 1st, which is only a few weeks away, so 6 weeks of tracking his hours will set a thorough pattern.

@NotEnoughRoom - thank you, I will suggest that.

Well they didn't, and haven't.

Updating here as he is now into busy season at his employment. Expected to come in at weekends. Did 11 hours yesterday. No TOIL.Straight back in first thing this morning and won't leave until 9pm tonight. All this, ona regular basis for 23k pa. It has to be way under NMW but I still don't understand how to calculate salary equivalent of NMW.

Someone up thread said divide his salary by 52 weeks. But if he is doing 50 hour weeks, do you assume the same level of hours in holiday weeks?

Please can someone advise me as he needs help and support in this and I don't know where or how to begin to find out how to calculate this to legal guidelines.

He doesn't have time to look into it as he's at work all the time, then too knackered when he gets back to do anything but cook and sleep. He's been doing 6 days a week most weeks recently. His immediate boss is paid only £24k and works even longer hours, often 7 days a week. (He is not from UK and his visa is linked to his employer so he has told DS he feels he can't challenge the hours and pay.) . The company owner is a bully and screams at the immediate boss, so DS is very nervous of even asking about it. I want to help clarify his rights for him but I just don't understand how to begin to work out hours and holiday pay on a salary to discover how much he has been underpaid.

But he isn't contracted by the hour. That's the confusion.

As a pp said just divide by 52 and ignore holiday pay, then if I do this, the maths seems to be:

£23000/52 = £442.31pw

If NMW is now £11.44 then £442.31pw/11.44ph=38.66 hours pw

So if he is working more than 38 hours and 40 minutes per week then he is being paid below NMW.

Have I got this right?

Annual leave is paid, so stop including that in calculations.

How many hours is he contracted to do a week?

Take his salary, divide by 52 then divide by his contracted hours - that'll give you his contractual hourly rate.

If he then does overtime that is mandatory or requested by his employer that he is not paid extra for then take a look at his average hours per week over the last 6 months. Do the same calculation as above and that will give you what his real life hourly rate is.

If the overtime is reducing his hourly rate to a point below NMW he needs to bring this to his employer's attention. While there is no requirement to make them pay him for his overtime, this cannot take him below the NMW hourly rate.

Is there a union he can join? Challenging exploitative bosses is what they're for.

This.

Also worth noting that the Working Time Directive is very clear that employees must have 11 hours between shifts. If he chooses to work overtime that reduces that time, he can subject to his employers agreement, but if the overtime is required/mandatory, then he must be given 11 hours between shifts.

I work 40 hours a week, but my
contract is 37.5 hours (30 minute lunch is unpaid). This is pretty standard. So is he contracted for 7.5 hours a day? In which case his hourly rate is £11.79 (£23k/52/5/7.5).

Holiday pay is usually based on an average salary over the week(s) preceding the holiday. So if has done overtime and been paid more, he may end up getting paid more when is actually on holiday.

You need to ask what his contracted hours are.

the 5.6 weeks includes bank holidays.

It may or may not include bank holidays. Whether it does or doesn't then 5.6 weeks is still the minimum holiday entitlement I.e. Might be 20 days + 8 bank hols or could get 25 days + 8 bank holidays, etc.

Someone up thread said divide his salary by 52 weeks. But if he is doing 50 hour weeks, do you assume the same level of hours in holiday weeks

Forgetting the overtime for a minute, whether he's working or taking leave, it's likely he'll get paid a fixed amount each month, which should be at least NMW based on contracted hours x 52 x hourly rate.

If he's required to work more than his contracted hours, he should either be able to take the time back at another time (may be called time off in lieu, TOIL or flexi leave) without reducing his monthly salary. Or he should be paid overtime for the extra hours.

What shouldn't happen is that he's required to work above his contracted hours and certainly not without TOIL or paid overtime, especially if it takes him below NMW.

But he doesn't have contracted hours. There is not a set number of hours per week specified in his contract. So he can only assume that his hours are his annual salary divided by 52 and then divided by NMW to work out the legally contracted hours he should do per week, which is 38.66. He is currently doing about 50 pw and has never done less than 40.

By his reckoning, if he combines all the outstanding holiday pay and TOIL, he is owed about six weeks off, on full pay and he doesn't think the boss will be happy about this.

His contract doesn't stipulate hours.

He's mentioned it to his employer in an email today and the response was: no one else has complained.

Immaterial. It's illegal and his boss knows it. The question now is, how does a junior handle a boss who knows he is exploiting his workers and doesn't care.

He had no increase in April when NMW went up. But if no hours are stated in the contract, and there is no system for logging hours on time sheets or clocking in and out, the boss probably thinks he can get away with it as it could be hard to prove.

Thank you. I told him this.

To what extent are his hours directed? Is it 'be here between 10am and 7pm and you'll be formally disciplined if you aren't?'. Or is it more 'you start at 10, here is your work, which is clearly so much it'll take you 9 hours a day and if you leave before 7 everyone will look at you disapprovingly'? They're both exploitative but one is a much more straightforward situation than the other.