The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal
Voluntary Living Wage rates announced 2 November 2016
The UK rate of the Living Wage has increased from £8.25 to £8.45 and the London rate has increased from £9.40 to £9.75 per hour.
Living Wage Week takes place each year during the first week of November and as part of this the new rates are announced. The UK rate is announced simultaneously in cities around the country whilst the London rate is announced by the Mayor of London. The Mayor of London Sadiq Khan announced that the new London Living Wage has increased from £9.40 to £9.75 per hour to reflect the higher cost of living facing families in the city – an increase of 3.7 per cent. This year over 300 more London-based employers have signed up to pay their staff the hourly rate required to make ends meet in the capital, bringing the number of London Living Wage employers to nearly 1000. The UK rate has increased by 2.4% from £8.25 to £8.45. This is 17% higher than the government minimum for over 25s which is £7.20 per hour. And in total nearly 1,000 employers have signed up since Living Wage Week last year bringing the total number of accredited Living Wage organisations to nearly 3000. New household names are announcing their commitment to pay the real Living Wage: Everton Football Club , the British Library , RSA Insurance Group , Curzon Cinemas and law firm DLA Piper International . They join employers across the UK ranging from FTSE 100 companies to small independent businesses who are choosing to go further than the government minimum wage and ensure that all their staff and onsite contractors earn the real Living Wage which meets the cost of living.
These companies join others signed up with the Living Wage Foundation including household names IKEA , Majestic Wine , National Express Bus and EDF Energy .
The announcements come after new research published by KPMG showed that 1 in 5 people are still paid less than the real Living Wage.
For further information about the Living Wage Foundation and Living Wage week visit the Living Wage Foundation website.
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NMW and interaction with the £1 deduction fee for AEOs 4 November 2016
Some readers may remember that some 6 or 7 years ago now, the then IPP Policy team were working to have the National Minimum Wage (NMW) regulations and associated guidance reviewed and amended in light of some employers being caught out with compliance. At the time we were receiving several queries relating to the treatment of the £1 deduction fee for Attachment of Earnings Orders (AEOs) and the interaction with the NMW We began communications with the Department for Business, Innovation and Skills (BIS) (now BEIS) and were informed that employers were not permitted to operate the £1 deduction for operation of an AEO, in cases where this would take an employee below the NMW. According to BIS, the fee is seen as a benefit to the employer when in fact, we understand the fee is meant to compensate the employer for operating the AEOs on behalf of the Courts, Child Support Agency and Local Authorities. The above situations are grey areas for employers and for this reason we contacted HMRC and BIS again to request that they consider the following: That the guidance is clarified as to the correct tax and NI treatment for the £1 administration fee. That the NMW regulations are reviewed in order to remove the regulation preventing employers from deducting the £1 administration fee when the employee earns the NMW. The initial response from HMRC said that the effect of these deductions remains the same in that an employer can deduct an amount from a worker’s remuneration and pay it to someone else on their behalf without that amount affecting the worker’s NMW. Therefore any deduction in respect of the AEO itself will not reduce a worker’s NMW. However, a deduction for a related administration fee is a charge which is retained for the employer’s own use and benefit and will accordingly reduce the NMW under Regulation 32(1) (b) of the NMW Regulations 1999.
The Chartered Institute of Payroll Professionals
Policy News Journal
cipp.org.uk
Page 353 of 588
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