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Why Fixed Salaries Still Need to Meet Minimum Wage Requirements

A recent Workplace Relations Commission decision is a timely reminder for employers that paying an employee a fixed salary does not remove the obligation to comply with minimum wage and working time legislation.

The case involved a construction worker who was awarded over €14,000 after the WRC found that he had been significantly underpaid while working for a Cork-based construction company. The worker’s contract stated that he would work from 8.00am to 5.00pm, Monday to Friday. However, evidence before the WRC showed that he worked an average of more than 56 hours per week while receiving a fixed monthly salary of €1,600, which equated to less than €7 per hour.

While the facts of every case will differ, the employer lesson is clear: a fixed salary must still be tested against the actual hours worked. If the hours increase but the pay remains the same, the employee’s effective hourly rate may fall below the legal minimum.

A Salary Is Not a Shortcut Around Minimum Wage Rules

Many employers use monthly or annual salaries for ease of payroll and administration. That is perfectly common. However, a fixed salary does not mean the employer can ignore the number of hours actually worked.

The practical question is not simply:

“What is the employee paid each month?”

The better question is:

“When the employee’s actual hours are taken into account, does their pay still meet the required minimum hourly rate?”

This is particularly important where employees work long days, additional hours, weekend work, travel time, set-up time, closing time, or duties outside their core role.

A salary that appears reasonable on paper can become a compliance issue if the employee is regularly working far more hours than expected.

Actual Hours Matter

In the WRC case, the employee’s contract provided for standard working hours, but the evidence showed that his actual working pattern was much longer. This is the key point for employers.

The written contract is important, but it is not the end of the analysis.

If the contract says one thing and the working reality is different, the employer may face difficulty relying on the contract alone. The WRC will look at what happened in practice, including the hours worked, the pay received and the records available.

Employers should therefore regularly review whether salaried employees are working additional hours that bring their effective hourly rate below the required minimum.

This can happen more easily than many businesses realise, particularly in sectors where working hours can fluctuate or where employees are expected to “get the job done” regardless of the time involved.

Record-Keeping Is Essential

One of the biggest risks for employers is poor record-keeping.

If an employee brings a complaint about underpayment, working time or annual leave, the employer may need to show what hours were worked and what payments were made.

Employers should be able to produce accurate records showing:

  • The employee’s agreed working hours;
  • The employee’s actual start and finish times;
  • Any additional hours worked;
  • Rest breaks;
  • Annual leave;
  • Public holiday entitlements;
  • Payslips and payroll records;
  • Any deductions made;
  • Any changes to pay or working arrangements.

Without reliable records, it can become much harder for an employer to defend a complaint.

For salaried employees, employers should not assume that time records are unnecessary. If the employee’s pay needs to be assessed against minimum wage or working time obligations, records will matter.

Probation Does Not Justify Underpayment

The case also highlights a common risk around probationary periods. The worker was reportedly told that his salary would increase to the market rate after successfully completing a three-month probationary period, but his salary was not reviewed despite remaining in employment for approximately eight months.

Employers can use probationary periods to assess suitability for a role, but probation should not be used as a reason to avoid basic employment obligations.

Even during probation, employees remain entitled to proper pay, statutory leave, rest periods and fair treatment. An employer cannot rely on probation to justify payment below the legal minimum.

If an employer promises a pay review after probation, that review should be diarised, documented and carried out. If the pay is not being increased, the employer should have a clear and lawful reason for that decision.

Working Time and Pay Should Be Reviewed Together

Minimum wage compliance cannot be separated from working time compliance.

If an employee is working longer hours than expected, there may be several risks at once:

  • The effective hourly rate may fall below the minimum wage;
  • Rest breaks may not be provided;
  • Daily or weekly rest periods may be missed;
  • Annual leave may be miscalculated;
  • Payroll records may become inaccurate;
  • The employer may be relying on an unsustainable staffing model.

This is why employers should not look at salary in isolation. Pay, hours, rosters and records should be reviewed together.

A monthly salary may be lawful where the working hours are properly managed. The problem arises where the hours worked are not monitored, not recorded or not reflected in the employee’s pay.

Employers Should Be Careful With Migrant Workers and Permit Promises

The case also involved a migrant worker who had been recruited with a promise of an employment permit. MRCI noted that workers in this position can be particularly vulnerable where their employment and immigration status are closely linked.

Employers who recruit migrant workers should take particular care to ensure that all employment terms are clear, lawful and properly explained.

This includes clarity around:

  • Pay;
  • Working hours;
  • Accommodation, where relevant;
  • Permit status;
  • Probation;
  • Role duties;
  • Overtime expectations;
  • Who the employee can speak to if they have a concern.

Where an employee has limited knowledge of Irish employment law or limited English, the employer should be especially careful that the employee understands their terms and is not placed at a disadvantage.

This is not just a compliance issue. It is also a reputational and workplace culture issue.

Dismissal by Text Creates Further Risk

The worker was reportedly dismissed by text message and instructed to vacate employer-provided accommodation.

For employers, this is another important reminder. Even where an employment relationship is difficult, ending employment should be handled carefully and properly.

Dismissal by text message is rarely appropriate and can create unnecessary risk, particularly where the employee is also dependent on the employer for accommodation or immigration-related matters.

Employers should ensure that any termination is handled through a fair process, with clear communication, proper documentation and consideration of the employee’s contractual and statutory entitlements.

Practical Steps for Employers

Employers can reduce risk by carrying out regular payroll and working time checks.

A practical review should ask:

  • Are salaried employees working more hours than their contracts state?
  • If so, does their effective hourly rate still meet minimum wage requirements?
  • Are start and finish times being recorded?
  • Are breaks and rest periods being taken?
  • Are payslips accurate and easy to understand?
  • Are annual leave and public holiday entitlements correctly calculated?
  • Are probationary pay reviews being carried out when promised?
  • Are any deductions lawful and documented?
  • Are managers aware that additional hours can create minimum wage risk?
  • Are migrant workers being given clear and accurate information about their employment terms?

These checks do not need to be complicated, but they do need to be consistent.

Key Takeaway for Employers

Employers can reduce risk by carrying out regular payroll and working time checks.

A practical review should ask:

  • Are salaried employees working more hours than their contracts state?
  • If so, does their effective hourly rate still meet minimum wage requirements?
  • Are start and finish times being recorded?
  • Are breaks and rest periods being taken?
  • Are payslips accurate and easy to understand?
  • Are annual leave and public holiday entitlements correctly calculated?
  • Are probationary pay reviews being carried out when promised?
  • Are any deductions lawful and documented?
  • Are managers aware that additional hours can create minimum wage risk?
  • Are migrant workers being given clear and accurate information about their employment terms?

These checks do not need to be complicated, but they do need to be consistent.

📞 Contact us today for confidential guidance.

Disclaimer: This article is for general information purposes only and does not constitute legal advice.

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    We are honoured to share that Ormonde Solicitors & Employment Matters has been named the Business All-Star Labour & Employment Law Practice of the Year 2025 & 2026. This prestigious recognition from the All-Ireland Business Foundation reflects our ongoing commitment to fair workplace practices and expert legal representation, led by the dedication and vision of Sean Ormonde. We are deeply grateful to our loyal clients, dedicated team, and the AIBF for their continued support and trust.