Stay ahead of the curve with our exclusive Q&A series, brought to you by leading law firm, Arthur Cox, LLP, designed to answer your most pressing legal questions. These expert insights provide clear guidance to ensure your HR practices remain compliant and protect your organisation.  

This month's question:

Can a shift allowance be included in the calculation of a worker's pay for national minimum wage purposes?

Shift allowance is a form of discretionary additional pay given to employees who work during unsociable hours such as nightshifts. In the UK, there is no law requiring employers to pay shift allowances. 

Under the National Minimum Wage Regulations 2015 (“NMW 2015”) (as amended), employers are legally required to pay employees the relevant national minimum wage. Under the NMW 2015 the calculation for determining whether the national minimum wage has been paid is: remuneration in the pay reference period divided by the hours of work in the pay reference period.  In this calculation, A “pay reference period” is a month, or in the case of a worker who is paid wages by reference to a period shorter than a month, that period. 

However, the NMW 2015 section 10(j) excludes shift allowances from being considered when calculating whether an employee’s pay meets the national minimum wage.