ADVERTORIAL
How to remain compliant as HMRC cracks down on NMW breaches
As HM Revenue and Customs (HMRC) is being more reactive and proactive this year in national minimum wage (NMW) compliance, Cybill Watkins, group product legislation manager for Moorepay and Zellis, provides top tips in this area H MRC has a dedicated proactive enforcement team, reminding all employers to make sure their l interns and volunteers l weeks in a year for calculations l salary sacrifice payments. Top tips for remaining compliant
annual figure. The guidance says you could use 52, 52.14 or 52.18 weeks but which of these could risk a breach? Remember it’s the employer’s responsibility to ensure they’re using an appropriate calculation that maintains their compliance l if an employee reduces their contracted hours, ensure their ongoing salary sacrifice agreements won’t cause a breach in NMW l when an employee joins a new salary sacrifice scheme, don’t presume they’re eligible. You need to assess each case individually and have a robust eligibility checking process for any schemes employees sign up for outside of your company l check whether other deductions made could trigger a breach, such as court order admin fees or recovery of training fees (especially if this is from gross pay – even if it’s contractual) l if your business is an accredited living wage employer, this doesn’t mean you’re not at risk of breaching NMW. Ensure you follow the above steps so you don’t end up in difficult situations l finally, ensure you’re using the correct categorisation – salaried, unmeasured or time and output. If you have an unmeasured worker (e.g., someone who receives sales commission) set to salaried in your software (or manual calculation), you’ll put yourself at risk because you won’t be performing the correct calculation. HMRC gives good examples on which category should be used when. To avoid NMW breaches, it’s essential for businesses to have the correct policies, procedures and tools in place. Naturally, ongoing training and support is also at the heart of this, to ensure both payroll and human resource teams keep abreast with legislative changes. q
wages are watertight. The team will be sending ‘nudge’ letters, reminder letters, offers of ‘health checks’ and intends to actively visit businesses of all types in the coming year. What’s new? HMRC has told various advisory businesses it’s planning to re-visit a range of previously investigated large businesses (who have had investigations / visits over the last six years), to check any recommendations were implemented and to explore salaried staff breaches (watch out, as this will most likely be relating to excess hours). In addition, HMRC is inviting several large employers to discuss payroll and NMW calculations to try and educate and support employers to put right any breaches. HMRC also has a reactive enforcement team. This team will investigate an employer on the back of a complaint to the Advisory, Conciliation, and Arbitration Service (Acas) or HMRC directly by a current or previous employee, or anonymously by anyone who may think a company isn’t being compliant. Many issues will be of a technical nature, instead of concerning a basic hourly rate for a timed worker being below the rate due. The problems could arise on higher salaried employees and, regardless of whether the error was intentional, it can still land your business with fines and a place on the ‘name and shame’ list. HMRC has advised of five key areas where organisations run the risk of being inadvertently in breach of NMW rules: l salaried excess hours l additional working time
l keep evidence of the actual hours worked (not contracted) for both hourly wage and salaried employees, and check these against the employees’ contractual hours regularly (they should be assessed every pay period). Consider a bespoke report which compares time and attendance records with NMW, if your software has this capability l review your pay codes regularly to ensure only temporary and permanent are included in the NMW calculations l ensure you have a robust process to ensure each worker is in the correct role type. This can prevent issues with payments further down the line l combine all salary sacrifice reductions including pensions in each calculation period to make it easier and remember that the order of the employee joining the scheme dictates which element the employer would need to make up should a breach occur. Ensure you’re considering your employees’ reduced salary (after salary sacrifice deductions have been taken out) to establish whether each employee is receiving pay of at least the NMW level so that you’re not inadvertently breaching NMW rules l consider aligning all your salaried employees onto the same calculation year. Just remember to follow the correct process of notifying the employee when you do this, otherwise HMRC won’t recognise your new company calculation year, and you risk breaching NMW by default l check your system configuration for converting weekly contractual hours to an
| Professional in Payroll, Pensions and Reward | November 2022 | Issue 85 30
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