Caroline Harwood
Partner, National Head of Employment Tax
Ensuring that you are paying your employees at least National Minimum Wage (NMW) or National Living Wage (NLW) is an important requirement. Now more than ever, employers are coming under increased scrutiny to be NMW compliant.
Where underpayments of NMW are established by HMRC, the cost to employers can be significant. Not just in pure financial terms, but also in relation to their reputation, with naming and shaming being reintroduced in certain circumstances. Penalties of up to 200% can also be imposed where underpayments of NMW/NLW have occurred.
Additionally, it can now be a requirement, where you are providing services to other organisations, to provide assurance that your own employees are being paid in accordance with NMW/NLW regulations.
NMW Compliance
Paying the appropriate NMW/NLW rate can seem straightforward. However, in the event of an HMRC review, it will not be merely the hourly rates paid via payroll coming under scrutiny, but will also include a number of additional potential risk areas, including;
- Insufficient or lack of time keeping records
- Additional time worked by employees and not paid for (such as arriving early or leaving late, being subjected to compulsory searches, etc.)
- Trial shifts
- Salary sacrifice
- Deductions for uniform costs or imposition of specific dress code.
- Volunteers
- Deductions from pay for savings clubs, travel cards or subsidised car parking
- Deductions for accommodation
Our specialist NMW team comprises both employment tax experts and ex HMRC NMW inspectors who will provide you with a fully integrated service to help you to navigate through this complicated area.
We have advised a wide range of clients across different sectors including manufacturering, aviation, healthcare, brewing industry, hospitality and retailers, including supermarkets, who have had to deal with the challenges of an HMRC review.
How we help with National Minimum Wage policies and reviews
We will help protect your business and reputation by proactively reviewing your policies and procedures using a methodology that replicates an HMRC NMW enquiry. By approaching your business in this way we can work with you to establish your current level of compliance and highlight areas of risk, as well as agreeing a plan of action to strengthen those areas and future proof your business.
If you are already the subject of an HMRC review, we will support and guide you through the whole process, including preparing you for the review itself and helping you address any concerns raised by HMRC.
