COMPLIANCE
Minimum wage – maximum help
Jeni Morris, head of the national minimum wage (NMW) team, EY, emphasises how important it is to be educated on the nuances of NMW
T o most people, the NMW is just ‘a rate of pay based on how many candles there are on the employee’s birthday cake’. If only it were that simple! For me, the complexities, intricacies and sometimes illogical rules have held my curiosity for many years, and it continues to occupy my working day in supporting, educating and enlightening businesses, organisations, employees and frankly, anyone who will listen. My interest in NMW legislation started during my previous career working for HM Revenue and Customs (HMRC). I changed departments to join a small, niche department which enforced the NMW. The NMW legislation was relatively new, having been established in 1999, and HMRC’s national team consisted of around 100 people at the time. Learning the legislation, regulations and guidance around NMW, I came to appreciate the many nuances, twists and turns within the rules which often caught out employers and advisors alike. I lost count of the number of times I met with employers and their advisors during an investigation who were blindsided by the NMW rules, which unintentionally resulted in them underpaying their employees. Why did so many businesses seem unaware of their responsibilities when it came to NMW? I can sum this up in a phrase: ’education, education and education’. In my opinion, there wasn’t sufficient promotion of the legislation and guidance, and it certainly didn’t provide information regarding the NMW technicalities that employers often stumble
into. There was also a massive educational piece for workers who needed to know their rights to ensure the pay they received was correct. “Don’t just assume your national minimum wage compliance checks and balances are robust enough to withstand an HM Revenue and Customs national minimum wage investigation – take time to check and ask”
rewarded with a voucher as a ‘thank you’ for their support. The examples which still cause much concern are the technical slip-ups, mainly derived from incorrectly understanding the calculation requirements of each worker category, which are salaried, time, unmeasured and output workers. A salaried employee earning an annual salary of £50,000 wouldn’t normally jump to mind as being at risk of being underpaid NMW. However, we’re increasingly seeing middle managers on a higher-than-average UK salary being paid below NMW. This could be due to a large voluntary salary sacrifice pension deduction in a pay period or down to an employee reaching their contracted hours before the end of their calculation year. Every working day I come across NMW risks, from the footwear worn by all staff in a national restaurant chain, accommodation provided to staff, pension salary sacrifice and worker status to cross- border travellers and volunteers at events. The implications of NMW compliance are weaved into all aspects of our working lives. There are some quick fixes for many of these risks which can be made by: l working with human resources and its onboarding processes l clarifying current policies and practices l streamlining payroll administrative burdens regarding NMW checks. It all comes back to the importance of education. Don’t just assume your NMW compliance checks and balances are robust enough to withstand an HMRC NMW investigation – take time to check and ask! n
There are the usual common NMW risks such as:
l pay elements l time worked l excess hours l worker category.
However, there are many other hidden risks which can be sector specific, such as delivery drivers and the requirement to keep the vehicle clean, airline crews required to be presentable and wear make-up while on shift and volunteers
15
| Professional in Payroll, Pensions and Reward |
Issue 97 | February 2024
Made with FlippingBook - Online magazine maker