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  • The government announces reform for National Minimum Wage

The government announces reform for National Minimum Wage

The reform aims to ensure employees can continue to access benefits without businesses risking non-compliance.

13 Feb 2020, 2 min read

How will this reform affect your business?

Under the changes, the government will amend NMW regulations to allow salaried hours workers to be paid in additional pay periods such as fortnightly or four-weekly.

Retailers and their workforce will massively benefit from this change as annualised hours arrangements are very popular in the industry.

Payment practices of contracted employees in regular instalments, with fixed yearly working hours, helps workers to budget. This gives them financial stability and prevents underpayment over the year.

Premium payments to salaried hours workers in respect of basic hours will also be allowed and will not form part of the workers’ remuneration for calculating NMW pay. Simplifying NMW regulations to improve compliance has been a long-standing call from the CBI and its members.

The government also announced that it will waive financial penalties for employers for breaches of rules relating to salary sacrifice and pay deductions, subject to eligibility criteria.

Under these circumstances, employers will also be exempt from the Naming and Shaming Scheme that will be reintroduced. The scheme will provide contextual information and a quarterly bulleting to better educate employers and workers on common compliance issues. The threshold for naming employers will increase from £100 to £500, meaning that firms which owe debts of more than £500 in NMW payments to their workforces will be named.

Improved, accessible and clearer guidance will also be part of The Department for Business, Energy and Industrial Strategy and HMRC’s new approach to NMW compliance. This includes:

  • Support through a new helpline for employers who operate deduction or salary sacrifice schemes
  • Employers accessing support and information directly from HMRC
  • New and small businesses being visited by HMRC to educate them on the NMW and support them in getting their payment practices right from the start.

If you have any questions about our work on pay policy or would like to share your experience with the NMW and how these changes will impact your business, please get in touch here.