(Parliamentary Under
Secretary of State (Minister for Small Business, Consumers and
Corporate Responsibility)): I am writing to inform
the House of changes to National Minimum Wage Enforcement. We
want to make it as easy as possible for businesses particularly
SMEs to comply with the law, whilst ensuring that workers get the
wages that they are entitled to, and if they don’t, we will
continue to crack down on companies that underpay their workers.
Last year, we consulted on specific aspects of the National
Minimum Wage regulations (salaried hours and salary sacrifice).
Following this consultation, we are making technical changes to
the National Minimum Wage regulations. These changes will address
areas of the regulations that are tripping up employers, without
reducing worker protections. Businesses are supportive of these
technical changes.
Salaried workers must be paid an annual salary for working a
particular number of hours over the course of a year and paid in
equal instalments. Changes to the regulations will widen the
range of pay arrangements that are compatible with workers being
treated as salaried hours worker to increase flexibility for the
worker and employers, including:
- Increasing the range of compatible payment cycles to salaried
hours workers (such as every two weeks or four weeks – currently
only monthly or weekly payment cycles are compatible);
- Making premium payments to salaried hours workers compatible
(such as for working on bank holidays), including where a
salaried hours worker’s contract specifies a premium pay
arrangement; and
- Enabling employers to specify the ‘calculation year’ for
their salaried workers (the reference point to identify when in a
year a worker’s basic annual hours, for which they receive their
salary, are exceeded).
The Government will also continue to name employers who fail to
pay the National Minimum Wage, following a review of the scheme.
We are making the public naming scheme more effective. We are
increasing the frequency of naming those companies who underpay,
and from now on, the threshold for naming employers who do not
pay National Minimum Wage will rise to £500, meaning that any
firm which owes arrears of more than £500 in National Minimum
Wage payments to its workforce will be named. Whilst still tough
on business, this will ensure that those that underpay by a
minimal amount can set things right and correct their mistakes.
We recognise that there is a need to educate employers and
support them to comply before enforcement action becomes
necessary. To achieve this, future naming rounds will be
supported by a quarterly educational bulletin to highlight
details of common compliance issues, including anonymised case
studies demonstrating how employers can become compliant. To
better contextualise the relative severity of breaches we will
publish additional information wherever possible.
Finally, as part of our drive to support businesses to comply
with the legislation we are:
- providing support via a helpline for employers who operate
deduction or salary sacrifice schemes. Employers will be able to
access support and information directly from HMRC;
- requesting HMRC to do more to proactively support new, small
businesses. HMRC will visit selected new, small businesses to
educate them on the National Minimum Wage and support those
businesses in getting their practices right from the start; and
- producing enhanced, business facing National Minimum Wage
guidance, that will be published shortly.
We will continue to look at these issues; for salary sacrifice
and deductions we are waiving financial penalties for employers
for certain breaches of rules (subject to eligibility criteria),
recognising that, in some limited instances, employers may be
penalised for offering these benefit schemes to workers and
misunderstanding the rules. For example, those that offer a
benefit to their workers, such as nurseries offering discounted
childcare for staff may find that they have inadvertently
breached pay rules, as they make deductions which takes the
take-home pay below minimum wage. Subject to strict criteria,
including that the worker opted into the scheme, we will waive
financial penalties for such breaches.
We are determined to increase compliance, whilst ensuring workers
receive the pay they are entitled to, continuing to be tough on
enforcement with companies that break the rules.
