Are your employees being overpaid or are you breaking the law by paying below the minimum wage without knowing it?

Written by Nilsson Denver

Friday, 04 July 2008 21:47

UPDATED 18/06/2007

Do you pay employees by the hour, or do you employ them on the basis of your weekly pay is
€291.94 per week, rather than €8.65 per hour? Do you use payroll software and put in hourly
rates or do you just put in a weekly pay amount? You may being breaking the law when paying a
weekly wage if you are a generous employer a give a paid morning break to your employees.

Are employees in your company paid when they take a break? Many companies give a 15 minute
tea break in the morning. This affects an employees hourly rate and if they are being paid
the minimum wages you may be unknowingly underpaying them and breaking the law.

What are working hours?
9am - 5pm
9am - 5.30pm
8.30am - 5pm
8.30am - 5.30pm
8am - 6pm

If you pay by the hour you can avoid any confusion at to what is the hourly rate. So if the minimum wage changes, the gross wages changes automatically. If overtime at time and a half needs to be calcualted then the hourly rate is available to you. You may accidently underpay someone if you just agree a weekly gross wage. Always give the hourly rate in the contract of employment.

Two examples showing how the hourly rate can be wrong.

Example 1 - with paid break
9am to 5pm (Assuming all breaks are unpaid)
Morning tea break 15 minutes (unpaid)
5 mornings tea breaks a week = 1hr 15min
Lunch break 60 minutes (unpaid)
5 afternoon lunch breaks a week = 5hrs
Total hours between 9am and 5pm = 8hrs
Less
Morning break 1/4 hr (15min)
Lunch break 1 hr (60min)

Working hours = 6 3/4 hours
Minimum Wage = 8.65 (from 1st July 2007)
Daily pay = 6.75hrs x Eur8.65 x 5 days = 291.94 per week

Example 2 - without paid break
9am to 5pm (Assuming all morning break is paid)
(You allow employees to make tea and eat something prior to lunch)
Morning tea break 15 minutes (paid)
5 morning tea breaks a week = 1hr 15min
Lunch break 60 minutes (unpaid)
5 afternoon lunch breaks a week = 5hrs
Total hours between 9am and 5pm = 8hrs
Less
Morning break - no deduction -
Lunch break 1 hr (60min)

Working hours = 7 hours
Minimum Wage = 8.65 (from 1st July 2007)
Daily pay = 7hrs x Eur8.65 x 5 days = 302.75 per week

How you can accidently pay below the minimum wage.

Using example 2, If you are an employer who pays 291.94 per week and does not pay for breaks you have now paid below the minimum wage.
Hours worked 9am to 5pm less 1 hour lunch = 7hours x 5days = 35 hours
Weekly wage = 290.25
Hourly rate = 291.94 / 35 hours (5 days X 7 hours) = Eur8.34 which is below the minumum wage

If the unpaid lunch break is shorter or longer then the hourly rate will be different again.

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