What is the pay reference period?
The pay reference period (PRP) is the period by reference to which a worker is paid and is the basis of calculating whether the national minimum wage (NMW) has been paid.
The worker does not have to be paid the NMW for each hour worked, but in general must be paid the NMW on average for the time worked in the PRP. However, there are special rules which must be applied depending on the type of work being performed - see our guide on the national minimum wage - hours for which the NMW must be paid.
How long is the pay reference period?
The PRP is usually the period of time for which a worker's wage is actually paid. So, workers who are paid weekly will have a PRP of one week, workers paid daily will have a PRP of one day and workers who are paid monthly will have a PRP of one month.
For the purposes of the NMW a PRP cannot be longer than one calendar month. So, employers who wish to pay their workers at intervals more than a month apart, such as those who wish to pay quarterly, will still need to make sure that workers receive the NMW during each calendar month in that quarter in order to comply with the law.
The pay that is allocated to a PRP is:
- pay received during that period
- pay earned in that period, but which is not received until the next period
For example, a worker may do some overtime or earn an extra bonus or commission towards the end of the current period. It may not be possible to calculate the earnings in time to get the money into the pay packet for the current period. But the money will still be counted in the current period when it comes to calculating whether the NMW has been paid, provided it is received in the next PRP.
It should be noted that payment delayed by more than one PRP cannot usually be referred back to the period it was earned in but counts in the period it is paid.
In cases where payment is not made in the period in which it is earned, it will not be possible to tell whether a worker has received the NMW for the current PRP until the end of the next PRP.
Any pay 'transferred' in this way from the period when it was received to the period when it was earned must stay transferred. It cannot also be allocated to the PRP when it was actually received as this would be double counting.
See an example calculation for pay reference period and commission earnings - Opens in a new window.
See an example calculation for allocating overtime pay to the previous pay reference period. - Opens in a new window
See an example calculation for allocating commission pay to the previous pay reference period - Opens in a new window.
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