Minimum rates of pay

Rules

Calculating the hourly rate

Under Section 20 of the National Minimum Wage Act 2000 the basic method of calculation is to divide the gross pay by the total number of hours worked. To begin with, however, it is necessary to note what pay is taken into account, what hours are included as working hours and what is the pay reference period (over what period the calculation is made).

What does not count as pay?

There are a number of items that are not to be included in the minimum wage calculation, these are:

• Overtime premium
• Call-out premium
• Service pay
• Unsocial hours premium
• Tips which are placed in a central fund managed by the employer and paid as part of your wages
• Premiums for working public holidays, Saturdays or Sundays
• Allowances for special or additional duties
• On-call or standby allowances
• Certain payments in relation to absences from work, for example, sick pay, holiday pay or pay during health and safety leave
• Payment connected with leaving the employment including retirement
• Contributions paid by the employer into any occupational pension scheme available to you
• Redundancy payments
• An advance payment of, for example, salary: the amount involved will be taken into account for the period in which it would normally have been paid
• Payment in kind or benefit in kind, other than board and/or lodgings
• Payment not connected with the person's employment
• Compensation for injury or loss of tools
• Award as part of a staff suggestion scheme
• Loan by the employer to you

What counts as pay?

For the purposes of the national minimum wage your gross wage includes, for example, the basic salary and any shift premium, bonus or service charge.

If you receive food (known as board) and/or accommodation (known as lodgings) from your employer, the following amounts are included in the minimum wage calculation:

• €54.13 for full board and lodgings per week, or €7.73 per day
• €32.14 for full board only per week, or €4.60 per day
• €21.85 for lodgings only per week, or €3.14 per day

Working hours

Your working hours are whichever is the greater:

• the hours set out in any document such as a contract of employment, collective agreement or statement of terms of employment provided under the Terms of Employment (Information) Act 1994,

or

• the actual hours worked or available for work and paid

"Working hours" include:

• overtime
• travel time where this is part of the job
• time spent on training authorised by the employer and during normal working hours

"Working hours" does not include:

• time spent on standby other than at the workplace
• time on leave, lay-off, strike or after payment in lieu of notice
• time spent travelling to or from work

Pay reference period

The employer selects the period, known as the pay reference period, from which the average hourly pay will be calculated. This might be, for example, on a weekly or fortnightly basis, but cannot be for a period longer than a month.

The employer must include details of the pay reference period in the statement of employment conditions to be given to an employee under the Terms of Employment (Information) Act 1994.

You may request a written statement from your employer of your average rate of pay for any pay reference period within the last 12 months. The employer has 4 weeks to supply the statement.

Exceptions to those entitled to receive the national minimum wage

There are some exceptions to those entitled to receive the national minimum wage. The legislation does not apply to a person employed by a close relative (for example, a spouse, civil partner or parent) nor does it apply to those in statutory apprenticeships. Also some employees such as young people under 18 and trainees are only guaranteed a reduced or sub-minimum rate of the national minimum wage.

Sub-minimum rates

Since 1 July 2011 the National Minimum Wage Act provides the following sub-minimum rates, see also 'Rates' below:

• An employee who is under 18 is entitled to €6.06 per hour (this is 70% of the minimum wage)
• An employee who is in the first year of employment since the age of 18 is entitled to €6.92 per hour (80% of minimum wage)
• An employee who is in the second year of employment since the date of first employment over the age of 18 is entitled to €7.79 per hour (90% of the minimum wage)

Trainees

The National Minimum Wage Act also provides sub-minimum rates which apply to employees who are over 18 and undergoing a course of structured training or directed study that is authorised or approved of by the employer.

Since 1 July 2011 the trainee rates provided by the Act are as follows, see also 'Rates' below:

• First one-third of training course €6.49 per hour (75% of national minimum wage rate)
• Second one-third of training course €6.92 per hour (80% of national minimum wage rate)
• Final one third of the training course €7.79 per hour (90% of national minimum wage rate)

Note: each one third period must be at least one month and no more than one year.

The Act provides certain criteria which the training course must meet if the trainee rates are to apply. For example, the training or study must be for the purposes of improving the work performance of the employee; the employee's participation on the training or study must be directed or approved by the employer; at least 10% of the training must occur away from the employee’s ordinary operational duties; there must be an assessment and certification procedure or written confirmation on the completion of the training course.

Exemption for employer

If an employer cannot afford to pay the national minimum wage due to financial difficulty the Labour Court may exempt an employer from paying the minimum wage rate for between 3 months and one year. Only one such exemption can be allowed.

The employer must apply to the Labour Court for the exemption with the consent of a majority of the employees, who must also agree to be bound by the Labour Court decision.

The employer must demonstrate that he/she is unable to pay the national minimum wage and that, if compelled to do so, would have to lay-off employees or terminate their employment.

An exemption may only be sought from paying the full rate of the national minimum wage, not for cases covered by the reduced rate, for example, employees who are under 18 years of age.

Victimisation

If you seek your entitlement to the national minimum wage you are protected from victimisation or dismissal. Victimisation is prohibited by the legislation. In addition if you are dismissed for seeking the national minimum wage, you may bring a claim for unfair dismissal regardless of length of service or number of hours worked per week.

If you are due an increase under the National Minimum Wage Act your employer cannot reduce your working hours without a corresponding reduction in duties or the amount of work.