Hello
Just started my first payroll client and hoping someone can tell me whether this is normal practice. It's not a situation I've come across in my own experience.
Calculating employees gross pay for the month. I've been told they work a 40 hour week at £7.20. So for November that would be 22 days at 8 hours at £7.20 = £1267.20. However that is not what they've been receiving. Instead they are paid the same averaged amount eacy month (in this case £1248).
Any changes - such as working an extra day, or taking unpaid time off, are then adjusted by adding/subtracting 8 hrs@£7.20.
I've not been able to get a straight answer on how the annual/average amounts have been calculated. All I get is "40 hour week @£7.20". Although from past figures it is probably (not as easy with some of the employees) 52x5*8*7.20.
I was initially concerned that they were not paying the minimum wage in months with 22 working days. I was assured 'This is just how it's done and it averages out over the year' (I'm sure HMRC would accept that argument when a maximum pay reference period is 31 days!)
However after some research I've identified that they are paying minimum - but only because meal breaks do not count as working time for the mimum wage calculation - despite being paid.
So - Is it really a common practice to take an hourly rate and contract hours, average over the year and pay 1/12th per month?
Am I guilty as charged of being pedantic?
Thanks for the advice.
Ian
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