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Government Response to National Minimum Wage Consultation

The government has been consulting on aspects of the National Minimum Wage legislation and has now announced that some changes will be on the way.

It intends to amend the rules to make it easier for employers to rely on the provisions for salaried hours work, waive financial penalties for employers for certain breaches of rules relating to salary sacrifice and pay deductions and resume the ‘‘employer naming and shaming’’ scheme.

It’s anticipated the changes will come into force on 6th April 2020.

Changes

In brief, the intended changes include:

1. Salaried hours work

  • Allowing employers to pay salaried hours workers in equal instalments using other types of payment cycles than those currently permitted, such as fortnightly or four weekly cycles, providing further flexibility to employers;
  • Allowing employers to choose the most appropriate “calculation year” for their workers, helping them to better monitor the hours worked by salaried workers and identify potential underpayment of wages;
  • Ensuring salaried workers can receive “premium pay”, for example for working on a bank holiday, without losing their entitlement to equal and regular instalments in pay.

2. Salary sacrifice and deductions

Whilst the government isn’t changing the rules regarding salary sacrifice and deductions, it is planning to introduce measures to support employers in what has become a particularly challenging area. The government intends to:

  • Introduce improved guidance to assist employers;
  • Waive financial penalties for employers for certain breaches of rules relating to salary sacrifice and pay deductions. This will be subject to strict criteria being met, such as the worker opting into the scheme. It’s important to be aware that uniform payments or deductions for other items connected with employment will not attract a financial penalty waiver.

3. Resumption of the ‘employer naming and shaming’ scheme

The policy of naming and shaming employers who breach the  National Minimum Wage Regulations was quietly suspended towards the end of 2018. The government plan to resume the old scheme with some amendments:

  • Employers will be named more frequently;
  • The arrears threshold for naming employers will in most cases increase from £100 to £500.

New National Minimum Wage Rates on the Way

As a reminder, from 1st April 2020 the National Minimum Wage Rates for:

  • Workers aged 25 and over will increase from £8.21 to £8.72 per hour
  • 21 – to 24-year-olds will increase from £7.70 to £8.20 per hour
  • 18 – to 20-year-olds will increase from £6.15 to £6.45 per hour
  • 16 – to 17-year-olds will increase from £4.35 to £4.55 per hour
  • Apprentices aged under 19 or in the first year of an apprenticeship will increase from £3.90 to £4.15 per hour.

If you have an employment law matter you would like assistance with, please do not hesitate to contact Kingfisher Professional Services Ltd as we are happy to help.