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The pay reference period is the period you pay a worker for. It is the basis for calculating whether you have paid a worker at least the minimum wage.

You do not have to pay a worker the minimum wage for each individual hour worked - but in general, you must pay them the minimum wage on average for all the qualifying time worked in a pay reference period.

A pay reference period is usually the period of time for which a worker's wage is actually paid. For example:

• workers paid daily will have a pay reference period of one day
• workers paid weekly will have a pay reference period of one week
• workers paid monthly will have a pay reference period of one month

For the purposes of the minimum wage, a pay reference period cannot be longer than one month. If you pay your workers at intervals more than a month apart, eg quarterly, you still need to make sure that workers receive the minimum wage each month.

Pay counted during a pay reference period for minimum wage purposes

For minimum wage purposes, the pay allocated to a pay reference period is any pay:

• received during that period
• earned in that period but not received until the next pay reference period

For example, if a worker earns commission towards the end of the current pay reference period it may not be possible to calculate their earnings in time to be included in their pay for that period. If you pay it to them in the next pay reference period the money will still count towards the period they earned it in.

However, if you delay the payment by more than one pay reference period you cannot usually count the money towards the period the worker earned it in. Instead, it counts towards the period in which it is paid.

Any pay counted in the period the worker earned it in rather than the period you paid it to them must stay transferred. You cannot include it in the pay reference period when the worker received it as well because this would be double counting.