Most common NMW breaches
HMRC investigations led to 524 employers paying back £16 million in wages underpaid to over 172,000 workers, together with potential fines of double that amount.
Most NMW breaches were unintentional, we look at the common employer mistakes.
Number 1 in the list was underpayments resulting from salary sacrifice schemes.
Main reasons for underpayment of the NMW:
- Deductions from wages for items such as food, uniform, equipment, childcare costs and salary sacrifice schemes.
- Unpaid working time, e.g. where additional work was carried out before and after a shift, where clock-in times had been rounded up, where travel time was not paid, and where a salaried hours worker worked in excess of their basic hours.
- Failure to pay the correct rate to apprentices.
- Failure to pay the uprated NMW rate.
- Failure to correctly apply the accommodation offset.
- Failure to pay a worker in accordance with the correct work type.
Salary sacrifice schemes lower a worker’s gross pay in exchange for a particular benefit, but if the adjusted wages are lower than the
NMW, a breach will have occurred.
Many employers think that provided the employee has opted for the benefit in place of gross salary, the impact on the NMW should not matter.
The fact is that only a very limited list of reasons are permitted to be taken into account if they have the impact of lowering wages below NMW levels.
The accommodation offset, that is a charge to the employee’s wages for the provision of accommodation, is one of those limited range of reasons.
What’s happening to NMW and the accommodation offset in April 2024?
You can read about the new rates, or watch our HR team’s video by clicking here (this will take you to the myHRdept website).
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