A week's pay under the Employment Rights Act 1996

by Practical Law Employment

A Practice note that explains the rules for calculating an employee's 'week's pay' under the Employment Rights Act 1996 (ERA 1996). This statutory calculation is fundamental for determining various employment rights, including statutory redundancy payments, guarantee payments, and basic awards for unfair dismissal. This note provides guidance on the essential first steps of establishing whether an employee has "normal working hours" and, if so, what they are, and identifying which elements of their pay package count as "remuneration". It explores the complex treatment of overtime, bonuses, commission, tips, and employer pension contributions. It also outlines the different calculation methods for employees with variable pay, and those with no normal working hours. Furthermore, this note discusses the statutory cap that limits a week's pay for certain awards and clarifies the modified rules for calculating statutory holiday pay under the Working Time Regulations 1998 (WTR 1998).