Example calculation for minimum wage arrears
Example of how to calculate minimum wage arrears.
The below example demonstrates how the minimum wage arrears formula can be applied to work out what arrears a worker is entitled to.
Example minimum wage arrears calculation
Please note this example uses the minimum wage rates for 2024-25.
A 45-year-old worker was paid 拢250 for 35 hours worked in the pay reference period 1 December 2023 to 8 December 2023. The arrears are calculated in April 2024.
The minimum wage rates for the relevant periods are:
- 拢9.50 for the pay reference period 1 December 2023 to 8 December 2023
- 拢11.44 for April 2024
1. Work out the minimum amount the worker should have been paid in the pay reference period and identify the size of the underpayment.
- Multiply the correct rate during the period of the underpayment by the hours worked: 拢9.50 x 35 = 拢332.50.
- Deduct the amount the worker was paid: 拢332.50 - 拢250 = 拢82.50 underpayment.
2. Divide the underpayment by the minimum wage rate which applied at the time of the underpayment and multiply it by the current rate.
拢82.50 梅 拢9.50 x 拢11.44 = 拢99.35
The worker is entitled to 拢99.35 in arrears.
Calculating arrears with the change of age band
On 1 April 2021, the age bands for the minimum wage rates changed, with workers aged 23 years old and over entitled to the National Living Wage. Where arrears are being calculated for a pay reference period starting on or after 1 April 2021 for someone who was aged 23 years old or over at the time, the current minimum wage rate which should be used is the National Living Wage rate for workers aged 23 years old and over. Where arrears are being calculated for earlier pay reference periods, the minimum wage rate to be used for those aged 23 and 24 years is the National Minimum Wage rate.