Payroll insight
[NMW] rates.” However, this has not stopped some employers having serious issues with NMW compliance. In examples we have seen, employees participating in childcare voucher or car leasing schemes have had reductions in pay sufficient to bring their hourly rates below NLW levels. In both examples, this was in relation to part-time workers, but it can easily apply to workers engaged on a full-time basis if insufficient checks are undertaken on pay levels before an employee joins any salary sacrifice scheme. Accommodation and rent deductions There are certain cases where rent deductions taken from the pay of employees who are staying in employer-owned or employer-provided accommodation, can count towards the NMW/NLW calculations and reduce their pay levels accordingly. This will apply regardless of whether the
deductions are taken from gross or net pay. GOV.UK explains that charges for accommodation will only affect an employee’s pay for minimum wage purposes if the charge is higher than a notional daily amount known as the accommodation offset, which is currently £7 per day. Though these rules will apply where the accommodation is provided in connection with the worker’s contract of employment, they may also apply where there is no link to the employment, where the employer is the worker’s landlord either because they own the property or are subletting it. This could apply in the case where a council is providing an employee with a council house and is making rent deductions directly from pay, rather than the individual making payments from their own bank account. However, GOV.UK goes on to say: “If someone working for a local housing authority or social housing provider gets
accommodation from their work, this doesn’t automatically count towards the [NMW] or [NLW]. It only counts if the accommodation is linked to the employment.” If we look at the NMW manual, no mention is made of the additional clause for housing authorities, and this may be interpreted to mean that there are issues even if there is no link to the employment. Therefore, as many councils are also local housing authorities, care should be taken in cases where the employer is the landlord, to ensure there are no compliance issues. In summary It’s clear that there are still many areas where employers are not fulfilling their duty to ensure pay levels are above the required statutory minimum levels. It can prove difficult to comply with the regulations, which is not surprising given the incredible complexity and contradictory nature of some of the guidance. Employers must take increasing care to ensure compliance with the legislation and avoid any excess charges. As always, we would recommend that professional advice is sought. n
...if insufficient checks are undertaken on pay levels before an employee joins any salary sacrifice scheme
Holiday pay and leave
Half day course
Case law continually produces changes to employees’ statutory holiday leave and pay entitlement, which are covered in this informative course, alongwith the various types of leave and the calculation of pay.
This course covers: l Understanding the legal framework l Calculating entitlement and handling requests l Calculating holiday pay l What to include in holiday pay l Handling part-time, shift, casual and agency workers
l Carrying over entitlement l Entitlement during other leave l Sickness absence l Future developments l The changing definition of holiday pay
Book online at cipp.org.uk or email info@cipp.org.uk for more information.
cipp.org.uk CIPP_UK cip .org.uk @CI P_UK
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| Professional in Payroll, Pensions and Reward |
Issue 42 | July - August 2018
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