Ordinary Rate of Pay and Hourly Rate of Pay

Section 60 I (1A) of the Employment Act 1955 states that:

Where an employee is employed on a monthly rate of pay, the ordinary rate of pay shall be calculated according to the following formula:

monthly rate of pay

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Section 60 I(1)(b) of the Employment Act 1955 states that the hourly rate of pay means the ordinary rate of pay divided by the normal hours of work.

Therefore in calculating the hourly rate of pay, it would be calculated as:

Ordinary Rate of pay

              8*

On the assumption that the normal hours of work per day is 8 hours.*

Section 60 I (1)(a) of the Employment Act 1955 states that the ordinary rate of pay means wages as defined in section 2. Section 2 of the Employment Act 1955 defines wages as follows:

"wages" means basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service but does not include –

(a) the value of any house accommodation or the supply of any food, fuel, light or water or medical attendance, or of any approved amenity or approved service;

(b) any contribution paid by the employer on his own account to any pension fund,

provident fund, superannuation scheme, retrenchment, termination, lay-off or retirement scheme, thrift scheme or any other fund or scheme established for the

benefit or welfare of the employee;

(c) any travelling allowance or the value of any traveling concession;

(d) any sum payable to the employee to defray special expenses entailed on him by the nature of his employment;

(e) any gratuity payable on discharge or retirement; or

(f) any annual bonus or any part of any annual bonus;

Section 60 I (2) of the Employment Act 1955 states that an employer may adopt any method or formula other than the method or formula in subsection (1A), (1B) or (1C) for calculating the ordinary rate of pay of an employee; but the adoption of any other method or formula shall not result in a rate which is less than any of the rates provided in the subsections.

There is nothing improper for an employer to use the formula of wages/26/7.5 to calculate the hourly rate of pay provided it is more advantageous to the worker. The basis for the company to use 7.5 instead of 8 as the denominator in calculating the hourly rate of pay would be the normal number of hours worked per day would be 7.5 hours instead of 8 hours.

Otherwise it is recommended to stick to 8 for 8 hours of work.