The HM treasury recently announced that the national minimum wage is set to rise in 2024 to at least £11 an hour. In addition the age threshold is going to fall from 23 to 21 years old from 1st April 2024.
Employers need to ensure that arrangements are made and that the effected employees rates are nmw compliant.
Simply paying is not enough and the HMRC are to step up investigations. Here are some points to consider.
There are four different sets of rules for calculating NMW pay, depending in what category the worker is in.
Directors can be included in NMW.
It is not just the time the worker spends at their station but the complete time spent at work.
Not all payments made to the worker count for NMW purposes.
Many deductions made, even when they benefit the worker, can reduce NMW pay
In our experience of HMRC investigations are that they commonly scrutinise the following activities.
- Any deductions or payments taken from the worker such as security deposits, canteen deductions, purchases for products including clothing.
- Forcing workers to wear certain clothing to carry out their duties, such as a uniform , or black trousers , white shirt and black shoes without reimbursing the worker from costs incurred.
- Operation of salary sacrifice arrangements, eg pensions, and childcare workers.
- Deductions made when they leave employment eg training costs, care hire costs
- Payments to volunteers or interns
- Failure to pay apprentices for all the time they have worked.
- Operational leave policies
- Administration, and handling transactions costs taken from the worker.
- Rounding of payment system to the nearest X minute , rounding of early starters, early finishes etc.
- Deductions to staff concerning living accommodation.
The HMRC can go back 6 years for current and ex worker underpayments and under payments are to be paid at the rate in the year it was made, not the rate at the time of the breach.
For more information contact Shakar Elahi at Elantax on 0207 403 1500.
