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This table is currently in 0NF (The 0th stage of Normalised Form). This is because the table has repeating groups. A repeating group has values that will be repeated unnecessarily due to variances in other fields. In this example, the repeating groups are Project Code, Project Title, Project Manager and Project Budget because they are duplicated unnecessarily due to the differences in Employee and Department. We must therefore isolate these fields to a different table.
This table is now in 1NF, because we have removed the fields on the left table that were duplicates. Employee No, Employee Name, Department No, Department Name and Hourly Rate. The composite key consists of the Project Code and Employee No. The two tables are linked. We assign Employee No. as a primary key (underlining it).
This table is naturally in 2NF, skipping the process to convert it from 1NF into 2NF. This is because there is only ONE primary key, rather than it being a composite key – encompassing two keys. If it were a composite key you would go through each field seeing if it depended on ONE part of the key (one primary key/2) rather than both of the keys (the full composite key)
This table is still in 2NF and not naturally in 3NF. This is because Department Name depends on Department No. (it is not a primary key). To reiterate, the rule is to check that there are no non-key fields that depend on other non-key fields. If they do, then you must isolate those into a separate table and put the non-key leader (has things depending on it) and make that a primary key.
Hourly rate and Employee Name pertain to Employee No. (key) Department name pertains to Department No. (key) Project Title, Project Manager and Project Budget pertain to Project Code (key). This is now in 3NF and the Normalisation process is complete.