The government seems to have accepted that the NMW legislation as it stands is highly complex and will be proactive in improving NMW guidance on the Gov.UK pages and will make it easier to navigate. There will be more in-depth guides on specific compliance issues, and new user-friendly guidance will be published shortly. There will be more help available to employers who operate deduction or salary sacrifice schemes, in the form of a helpline, and finally, HMRC will visit new and smaller businesses to provide education on the NMW to support them in getting it right first time. The upcoming Employment Bill is expected to follow on from the update to the NMW regulations and discusses plans to create a Single Enforcement Body to give the government greater powers to clamp down on employment law breaches and to stop unscrupulous employers.
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New National Minimum Wage Law: enforcement policy and salary sacrifice 19 February 2020 Earlier this month, the Department for Business, Energy and Industrial Strategy (BEIS) published updated guidance relating to the enforcement of National Minimum Wage Law, which discussed how employers will not have financial penalties imposed upon them in scenarios where National Minimum Wage (NMW) has not been paid due to a reduction in pay resulting from a salary sacrifice arrangement, where certain conditions are met. To clarify, the position on NMW and salary sacrifice remains unchanged, so a salary sacrifice arrangement must not reduce an employee’s cash earnings below the NMW rate – it is simply that associated penalties will not be issued where the following conditions are met: • 1.) The whole amount of the underpayment in the reference period needs to be attributable to a salary sacrifice scheme, or a purchase from the employer which is not for items required for the employee to undertake their work (e.g. uniform), or a savings scheme operated by the employer for the benefit of the employee • 2.) No part of the underpayment when it relates to condition one relate to deductions as respects a worker’s expenditure or as respects living accommodation • 3.) The worker has consented to the reduction or deduction • 4.) The worker has received the relevant goods or benefits, or repayment of monies into the saving scheme in full compliance with the terms and conditions • 5.) Employers that have been convicted of NMW offences, been party to a labour market enforcement undertaking or order, or who have been issued an Notice of Underpayment (NoU) in the past six years will still receive penalties To reiterate, NMW should not be reduced by a salary sacrifice or deduction arrangement. BEIS has confirmed the rationale behind the decision to remove financial penalties relating to the scenarios where this does happen, and stated that employers will still need to pay employees back for any underpayment in relation to NMW and salary sacrifice, but the removal of the associated financial penalties provides employers with an opportunity to reassess their practices and ensure that they are compliant with NMW law.
“The intention of the direction is to ensure that historical liabilities are repaid to workers, whilst providing employers wi th an opportunity to ensure their practices going forward are compliant with the law.”
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2018/19 confirmed as another record-breaking year for Minimum Wage enforcement 21 February 2020
The Department for Business, Energy and Industrial Strategy (BEIS) has confirmed, in a report, that tax year 2018/19 was a resounding success in terms of the enforcement of Minimum Wage.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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