Home Business News Solicitor warns small businesses should take note as HMRC is going after those who do not pay staff properly

Solicitor warns small businesses should take note as HMRC is going after those who do not pay staff properly

by LLB Finance Reporter
26th Jun 23 12:52 pm

Last week, more than 200 businesses were identified by the government for not paying workers the correct minimum wage, with penalties of almost £7 million handed out by the Department for Business & Trade.

They included major brands such as WH Smith, Argos and Marks & Spencer.

Following this, Steven Mather, a business lawyer with Nexa Law, says this is “likely the tip of the iceberg” and small businesses should take note. Mather says there are four key areas where employers typically fall foul of National Minimum Wage legislation, and has advised companies to look at their processes to ensure they are compliant.

Nexa Law believes that all workers are salaried. Employers should identify the category of work being done — salaried, time work, piece work or unmeasured — as each has an impact on the NMW calculation. Don’t just assume that a person’s ‘salary’ is sufficient.

Salary Sacrifice Schemes – HMRC consider post-sacrifice pay as what counts for NMW, so if someone is salary sacrificing for, say, childcare or a cycle to work scheme, then the employer must look at their pay after deductions to ensure it still meets the NMW.

Other deductions. Making deductions from wages for things that an employee has brought from you, e.g. for uniforms or tools or other employee benefits schemes, all reduce take-home pay and need to be considered for NMW purposes.

Apprenticeships pay. Employers must remember it increases when apprentices turn 19 and are in their second year — they no longer get the apprenticeship rate, they get normal NMW.

Mather added, “With HMRC recently receiving £7m in penalties, it is certainly a good time to review your employment practices to see if you are genuinely paying the National Minimum Wage or whether you might fall foul.

“If major brands can get it wrong, it is highly likely many small businesses are, too. The 200 plus firms fined are almost certainly the tip of the iceberg. If in doubt, and to avoid an unwelcome letter from HMRC, seek advice from a professional.”

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