How does the minimum wage affect a flat salary?

| 31/03/2016

Does the minimum wage take precedence over a flat wage/salary?

Auntie’s answer: Yes, it does. The salary has to equate to the mandated minimum wage when calculated on an hourly rate. As explained by an officer at the Department of Labour and Pensions, “The fixed salary has to be no less than the minimum wage requirement. In other words, the fixed salary must, at the very least, meet the minimum wage requirement.” And, thanks to the recently approved order, that minimum is $6 per hour.

The department’s website has an FAQ section devoted to the minimum wage, which probably contains more information than you would ever need, but here it is, just in case:

National Minimum Basic Wage FAQs 

To save me reading through the entire document to find the answer to your question, the labour officer very helpfully pointed out the relevant section, which is number 22, that explains how you can make sure a monthly salary meets the hourly minimum wage requirements.

You first need to calculate your annual salary by multiplying the gross monthly wage (before deductions for pension and health insurance) by 12. Then you multiply the number of standard working hours you are contracted to work in a week (in this example, 40) by 52 weeks in a year (that comes to 2,080 hours). Then, in this case, you divide your annual salary by 2,080 to come up with the corresponding hourly wage.

If that is too complicated for you, section 22 contains a sample calculation that should help. But if the prospect of attempting to do maths is causing you to break out in a sweat, maybe you can find a friend who would be happy to crunch the numbers for you.

Better still, anyone who is seriously numbers-averse will be glad to know that the Department of Labour and Pensions is planning to put a minimum wage calculator on their website “in the very near future”.

Depending on your maths skills, you will have to decide which will be faster – you taking pencil to paper or waiting for the department to upload the calculator.


Category: Ask Auntie

Comments (2)

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  1. Cho King Often says:

    As recently as today I still see adverts in the employment sections of local publications with salaries listed LOWER than the calculations above. Where is the enforcement of the new minimum wage?

  2. A Nony Mouse says:

    OK, so under the stated guidelines above the following is a minimum salary to equate to the newly established $6/hr minimum wage:

    $12,480 annually
    $ 1,040 monthly (40hrs/wk @ $6/hr)

    $14,040 annually
    $ 1,170 monthly (45hrs/wk @ $6/hr)

    I know a WHOLE LOT of people who are not being paid the “minimum wage” based upon these calculations! The majority of employers require the 45 hour work week. I guess there’s gonna be a rapid inflationary spiral when all is said & done with this new benchmark!

    Be careful what you wish for!