Pay rates are generally down to what is agreed between the employer and worker. However, employers must bear in mind the National Minimum Wage Act, 2000 which provides a structure for workers to receive a minimum hourly rate for each hour they are deemed to have worked. The legislation does not apply to statutory apprenticeships or people who are family members of the employer. Those on part-time, fixed-term, temporary or casual contracts or who are piece workers are entitled to receive the minimum wage. Self-employed people are not entitled to receive it.
Employers in certain industries must also be aware of Sectoral Employment Orders and Employment Regulation Orders which set minimum terms and conditions for workers within those industries, which include minimum rates of pay.
Employers must pay a national minimum wage to work experience placements, work trials, internships and any other employment practice involving unpaid work or working for room and board.
The employee's hourly rate of pay is calculated by dividing the gross remuneration (as defined in the National Minimum Wage Act, 2000) of the employee by the total working hours (as defined) of the employee in the pay reference period.
The pay reference period is the period of time over which the calculation is done to determine whether the employee has received the minimum wage for each hour worked. An employee must receive, on average over that pay reference period, at least the minimum wage for every hour deemed as working hours.
Employers are free to choose their own pay reference periods and they do not need to be the same as the pay period. For example, employers may choose a reference period of one month to perform the calculation for employees who are paid weekly. The length of the pay reference period cannot exceed one month.
The Act defines hours of work for the purposes of calculating the average. This includes:
- overtime hours
- time spent travelling on official business
- time spent training or on a training course or course of study authorised by the employer within the workplace or elsewhere, during normal working hours
- time spent on standby in the workplace.
All hours spent on the above elements are considered working hours and should be included in determining the average hourly pay.
Hours spent on the following are not to be included:
- time spent on standby or on call at a place other than the place of work or training provided by the employer for whom the employee is on standby or on call
- time spent absent from work on annual leave, sick leave, maternity leave etc
- time spent on lay off
- time spent on strike or lock out
- travelling to and from work
The Act lists various specific components of an employee’s pay that can be included in determining if the employee has been paid at an hourly rate of pay that, on average, is not less than the employee’s minimum entitlement to pay in accordance with the Act, in any pay reference period. It also lists the components that must be excluded.
1. Basic salary
2. Shift premium
3. Piece and incentive rates, commission and bonuses, which are productivity related
4. The monetary value of board with lodgings or board only or lodgings only, not exceeding the amount, if any, prescribed for the purposes of this item
5. The amount of any service charge distributed to the employee through the payroll
6. Any payments under section 18 of the Organisation of Working time Act, 1997 (zero-hour protection)
7. Any amount in respect of any of the above items advanced in a previous pay reference period that relates to the specific pay reference period
8. Any amount in respect of any of the above items earned in the specific pay reference period and paid in the next pay reference period.
1. Overtime premium
2. Call-out premium
3. Service pay
4. Unsociable hours premium
5. Any amount distributed to the employee in tips or gratuities paid into a central fund managed by the employer and paid through the payroll
6. Public holiday premium, Saturday premium and Sunday premium, where any such holidays or days are worked
7. Allowances for special or additional duties including those of a post of responsibility
8. Any payment of expenses incurred by the employee in carrying out his or her employment, including travel allowance, subsistence allowance, tool allowance and clothing allowance
9. On-call or standby allowance
10. Any payments for or in relation to a period of absence of the employee from the workplace, such as sick pay, holiday pay, or pay in lieu of notice, but not including a payment under section 18 of the Organisation of Working Time Act, 1997 (zero-hour protection)
11. Any payment by way of an allowance or gratuity in connection with the retirement or resignation of the employee or as compensation for loss of office
12. Pension contributions paid by the employer on behalf of the employee
13. Any payment referable to the employee’s redundancy
14. Any advance of a payment referred to in the Reckonable Components table
15. Any payment or benefit-in-kind, except board with lodgings, lodgings only or board only
16. Any payment to the employee otherwise than in his or her capacity as an employee
17. Any payment representing compensation for the employee, such as for injury or loss of tools and equipment
18. An amount of any award under a staff suggestion scheme
19. Any loan by the employer to the employee, other than an advance payment referred to in point 7 of Reckonable Components.
Employers need to be mindful that when their calculations include productivity-based payments, they must ensure the employee’s hourly rate of pay in any pay reference period must not fall below the minimum hourly rate of pay.
An employee is entitled to request (in writing) a written statement of their hourly rate of pay for any reference period (other than the current pay reference period) falling within the 12-month period immediately preceding the request.
Employers should provide the statement within four weeks of receiving the request. The statement should include the following information:
- details of pay components (including the value of all forms of remuneration) paid or allowed to the employee
- the working hours of the employee
- the average hourly pay (including the value of forms of remuneration other than cash payments) actually paid to the employee
- the minimum hourly rate of pay to which the employee is entitled.
The statement should be signed and dated by the employer. The employer should retain a copy of this notice on their file for a period of 15 months beginning on the date on which the statement was given to the employee.
Failure to comply with issuing this statement can result in a fine.
It was confirmed in the Budget for 2023 that the hourly minimum wage will be increased to €11.30 from 1 January 2023.
A rate of pay prescribed in any Employment Regulation Order or Sectoral Employment Order is not to apply to an employee if it is less than the national minimum hourly rate of pay to which that employee is entitled.
Any employee whose hours of work are assessed but whose work is not controlled or supervised, must keep a written record of working hours for each day that the employee works. This record must be submitted to the employer 72 hours after the pay reference period. In the event that the employee fails to submit a record of their working hours within the 72-hour period, the employer will be obliged under the Act to revert back to their contractual arrangement.
This does not apply to employees whose average hourly rate of pay is 150% or more of the national minimum hourly rate of pay.
Falsification of records of working hours shall render the employee guilty of an offence and they will be liable, on summary conviction, to a fine.
Employees are entitled to be paid not less than the national minimum hourly rate of pay unless:
- the employee is under 18
- the employee is a job entrant (before 4 March 2019)
- from 4 March 2019, the employee is aged 18 or 19
- the employer is in financial difficulty
Employee is under 18
Employees working under 18 years of age are entitled to 70% of the national minimum hourly rate of pay. On reaching the age of 18 for the next 12 months they are entitled to 80% of the national minimum hourly rate of pay. On completion of 12 months the employee (19 years of age) is entitled to 90% of the national minimum hourly rate of pay.
The employee is a job entrant
Sub-minimum rates of pay apply to first time job entrants aged 18 or over in their first and second year of employment. During the first year of employment, 80% of the national minimum hourly rate of pay is awarded.
During the second year of employment, 90% of the national minimum hourly rate of pay is awarded. For the purpose of calculation of entitlement to national minimum hourly rate of pay any period of employment during which the employee was under 18 shall be ignored. Therefore, an employee in employment under the age of 18 years is treated as a job entrant once they reach 18 years.
The job entrant rules will be replaced under the Employment (Miscellaneous Provisions) Act, 2018. From 4 March 2019, sub-minimum rates of pay will now be linked to the employee’s age rather than their work experience.
Job entrant rules replaced under Employment (Miscellaneous Provisions) Act, 2018
The job entrant rules are replaced by new rules under the Employment (Miscellaneous Provisions) Act, 2018 which are effective from 1 March 2019. Under the new rules, employees who have not yet attained the age of 18 will receive 70% of the national minimum wage hourly rate of pay, employees aged 18 will receive 80% of the national minimum wage hourly rate of pay and employees aged 19 will receive 90% of the national minimum wage hourly rate of pay.
From 1 February 2020, the NMW hourly rates will be:
Experienced adult worker (20 years of age or over)
Under the age of 18
Employees who are 18 years of age
Employees who are 19 years of age
The employer is in financial difficulty
The Labour Court may grant to an employer a temporary exemption from paying the national minimum hourly rate of pay to an employee, or number of employees. The employer must illustrate that they are unable to pay, and such a payment would result in the lay off or termination of employee(s). The employer must have the consent of each employee, or the majority of employees affected by the application. An application cannot be made in respect of an employee who is receiving a sub-minimum rate of the national minimum hourly rate of pay. The minimum period of an exemption will be three months and up to a maximum of one year.
An employer will be entitled to only one temporary exemption.
An employer will be required to keep records to illustrate that they are complying with the Act. These records must be retained for a period of three years and failure to comply with this requirement can result in a fine. The onus of proof lies with the employer.
The Minister for Business, Enterprise and Innovation may appoint inspectors with appropriate powers who will carry out inspections to ensure that employers are adhering to the provisions of the Act.
An employee may refer a complaint to an inspector for an investigation. An inspector may also carry out an inspection on his or her own initiative.
The Act prohibits an employer from victimising an employee who:
- exercised his or her rights under the Act
- in good faith opposed or proposed to oppose by lawful means an act which is unlawful under this Act or
- becomes or in future will or might become entitled in accordance with this Act to remuneration at an hourly rate of pay that on average is not less than the national minimum rate of pay, or a particular percentage of that rate of pay.
If an employee is dismissed as a result of exercising their rights under this Act, the Unfair Dismissals Acts, 1977 to 2015 will apply accordingly.
A national living wage will replace the national minimum wage from 2026. The living wage will be set at 60% of the median wage in any given year.
The national minimum wage will remain in place until the 60% living wage is fully phased in. The national minimum wage will increase over the years as usual.