COMPLIANCE
workers past the original project end date. Although off payroll working has been around for many years now, this can be a complex area and it isn’t always easy to assess the status of a worker. We always recommend our clients reach out for advice where they’re unsure and keep up to date with any changes to the legislation. National minimum wage (NMW) compliance The NMW is in place to provide protection to low-income workers. Many workers are still being paid slightly above or at the NMW, which can leave little wriggle room for error. Mistakes can be costly, with penalties being levied on employers who breach the rules of up
to 200% of arrears owed to the worker. In addition to financial penalties, employers can also be named publicly for any breach of the minimum wage rules, causing huge reputational damage. The NMW rate changes depending on the worker’s age, as well as annual increases being announced by the government to come into effect on the 1 April each year. It’s important employers pay the correct rate to their workers and communicate when there’s a change to their rate of pay. Any new rates should be applied from the start of the first pay period after the key date to avoid a NMW breach. Payroll professionals should always consider whether a rate change is required where a worker is paid at the NMW.
Another common area for accidental breach that payroll professionals should watch out for is where a deduction is made from a worker's pay for any items or expenses connected with their job, as this will reduce their pay for NMW purposes. Common deductions which can reduce pay include uniform and tools, and personal protective equipment. Although many payroll systems will flag if there’s a potential NMW breach, it’s important payroll professionals understand the NMW rules and the impact a potential breach may have. Over the past couple of years, we’ve seen increasing pressure on payroll professionals, due to the many changes in rules and legislation, alongside the high levels of staffing changes. It’s important that your payroll team remain up to date with any changes in legislation and I hope this article has highlighted the important part that payroll plays in employer compliance. n
"Over the past couple of years, we’ve seen increasing pressure on payroll professionals, due to the many changes in rules and legislation, alongside the high levels of staffing changes"
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| Professional in Payroll, Pensions and Reward |
Issue 88 | March 2023
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