Relevant legislation

The legislation that applies to this page is as follows:

• National Minimum Wage Regulations 2015, regulations 36 to 43

General

The concept of output work (NMWM07060) is that a worker is entitled under their contract to be paid by reference to a measure of output, such as the number of:

• pieces made,
• pieces processed,
• tasks performed.

For National Minimum Wage purposes, if the worker is required to perform their work at times controlled by the employer, then they will be performing time work (NMWM07040), even if the worker is still paid mainly by the “piece” or “task”.

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Rated output work

As National Minimum Wage is an hourly rate and checked against hours worked (and treated as worked) in a pay reference period, it is necessary to have a mechanism to ensure that pay based on output is producing payment to workers which is at least National Minimum Wage rates. This mechanism is known as “rated output work” (NMWM07080) and it gives employers the option to identify time to be paid by either:

• paying a rate of pay which ensures that National Minimum Wage is paid for time treated as worked, (this is known as the “fair” piece rate (NMWM03130) and is based on an average hourly output rate); or
• the time spent working in the pay reference period.