Government publish response to the salaried hours work and salary sacrifice consultation

Government have published their response to the consultation on salaried hours work and salary sacrifice scheme consultation as part of the Good Work Plan. HMRC agreed to consider changes to the NMW legal framework if the findings of the consultation showed that employers were burdened or received unnecessary penalties for unintentional non-compliance.

HMRC’s direct responses to the consultation are as follows:

• NMW regulations will be amended to include workers who are paid in equal instalments such as fortnightly or four-weekly in the definition of ‘salaried’.  Currently the definition in the Regulations applies only to those paid weekly or monthly.
• The regulations will also be amended to provide employers with the discretion to choose a calculation year for their workers.  This standard year can then be used to monitor the number of annual basic hours worked to make it easier to identify the point at which additional pay would be due to avoid a breach of NMW/NLW.
• The regulations will be amended to allow employers to make premium payments to their salaried hours workers in respect of basic hours and allow salaried hours workers’ contracts to specify these premium payments.  The premium payments will not count toward NMW pay. 

To promote and maintain compliance, HMRC are committed to the following:

• Improve the guidance available on the Gov website and make this easier to navigate.
• Waive financial penalties for certain breaches relating to salary sacrifice, subject to eligibility criteria.
• Under limited circumstances, employers will be exempt from the naming scheme.
• Information for the naming scheme will provide contextual information and will be published on a quarterly basis.
• HMRC also plan to introduce the “New, Small Businesses Project” and will visit selected new, small businesses to educate on NMW and offer support from the start as a way of preventing the accumulation of large NMW liabilities.
• HMRC will provide further support via a helpline.

Aspire Comment

Back in 2017 we were in correspondence with the Department for Business, Energy & Industrial Strategy regarding the difficulties that employers face in meeting NMW compliance.  We were asking them to consider providing more information about how breaches were reported (in a similar way that the ICO does about data protection breaches) so that employers could effectively learn from the mistakes of others.  Back then BEIS told us that they considered their guidance sufficient. 

It is interesting and encouraging then that they have now decided to improve their guidance and make it easier to navigate.  Time will tell how effective this is in helping employers to interpret this notoriously complex legislation. 

If you are concerned about your compliance with the NLW/NMW, please contact Aspire on 0121 445 6178 or email enquire@aspirepartnership.co.uk to discuss how we can identify any risk areas within your company.

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