[UK] National Minimum Wage Compliance Gets a Revamp

On the 11^th of February 2020, the government issued a press release following a review of the naming and shaming scheme. 

It confirmed that, following the review, employers who fail to pay workers the National Minimum Wage will continue to be publicly named.  Business Minister Kelly Tolhurst is quoted as saying “Anyone who is entitled to the minimum wage should receive it – no ifs, no buts – and we’re cracking down on companies that underpay their workers”.

However, the review has also brought up some other points which we want to mention.  These will all be confirmed in legislation and guidance and come into force at the start of tax year 2020/21:

• The threshold for the naming and shaming regime will be raised from £100 to £500. This means that employers that have total underpayments of less than £500 across their workers will not be named, providing they make good the underpayment to workers
• The pay arrangements for employers who have “salaried hours workers” will be reformed. These are workers who receive an annual salary in instalments for an agreed number of hours.  Employers will be able to choose their “calculation year” and additional pay cycles will be allowed (e.g. 2 weekly and 4 weekly which are currently not allowed)
• Employers who offer salary sacrifice schemes will be allowed to operate them without the deductions counting as reducing pay – i.e. if the reductions in pay result in the payment being below National Minimum Wage
• There will be improved guidance and support on gov.uk

The government says that the changes to the National Minimum Wages regulations come ahead of a major overhaul of labour market enforcement, with the creation of a Single Enforcement Body to crack down on employment law breaches, set to be announced as part of the forthcoming Employment Bill. 

Global Payroll Association Comment

We fully support the statement that employers should be paying the National Minimum Wage.  Yet we do not believe that most employers deliberately set out to flout the National Minimum Wage rules.  The sad fact is that compliance is very difficult given the complicated rules and guidance that’s available.  

So we welcome any simplification which we believe will help both employers and workers.  On the same day, the Department for Business, Energy and Industrial Strategy (BEIS) published an updated policy on HM Revenue & Customs’ enforcement of the National Minimum Wage.  This contains more information about the naming scheme and the salary sacrifice reductions that will be allowed (see the Secretary of State Direction in the annex).  Employers should also see the government’s response to the “Salaried hours work and salary sacrifice consultation” that gave rise to this policy change. 

On the 11^th of February 2020, the government issued a press release following a review of the naming and shaming scheme. 

It confirmed that, following the review, employers who fail to pay workers the National Minimum Wage will continue to be publicly named.  Business Minister Kelly Tolhurst is quoted as saying “Anyone who is entitled to the minimum wage should receive it – no ifs, no buts – and we’re cracking down on companies that underpay their workers”.

However, the review has also brought up some other points which we want to mention.  These will all be confirmed in legislation and guidance and come into force at the start of tax year 2020/21:

• The threshold for the naming and shaming regime will be raised from £100 to £500. This means that employers that have total underpayments of less than £500 across their workers will not be named, providing they make good the underpayment to workers
• The pay arrangements for employers who have “salaried hours workers” will be reformed. These are workers who receive an annual salary in instalments for an agreed number of hours.  Employers will be able to choose their “calculation year” and additional pay cycles will be allowed (e.g. 2 weekly and 4 weekly which are currently not allowed)
• Employers who offer salary sacrifice schemes will be allowed to operate them without the deductions counting as reducing pay – i.e. if the reductions in pay result in the payment being below National Minimum Wage
• There will be improved guidance and support on gov.uk

The government says that the changes to the National Minimum Wages regulations come ahead of a major overhaul of labour market enforcement, with the creation of a Single Enforcement Body to crack down on employment law breaches, set to be announced as part of the forthcoming Employment Bill. 

Global Payroll Association Comment

We fully support the statement that employers should be paying the National Minimum Wage.  Yet we do not believe that most employers deliberately set out to flout the National Minimum Wage rules.  The sad fact is that compliance is very difficult given the complicated rules and guidance that’s available.  

So we welcome any simplification which we believe will help both employers and workers.  On the same day, the Department for Business, Energy and Industrial Strategy (BEIS) published an updated policy on HM Revenue & Customs’ enforcement of the National Minimum Wage.  This contains more information about the naming scheme and the salary sacrifice reductions that will be allowed (see the Secretary of State Direction in the annex).  Employers should also see the government’s response to the “Salaried hours work and salary sacrifice consultation” that gave rise to this policy change.