HMRC targets rural businesses for minimum wage checks

minimum wage

Workers in the agricultural sector are among the most vulnerable to being paid below the minimum wage and HMRC are now cracking down on farm employers who fail to pay workers the National Minimum Wage (NMW). 

 

HMRC has been particularly active in this area at the moment and a number of farmers have reported undergoing wage checks. 

 

The government officials will scrutinise records to see that minimum wage levels are being met and the correct allowances and deductions are being made.

 

The penalties for non-compliance are severe. Employers will have to pay the arrears and can face a 200% non-negotiable penalty on underpayments going back up to six years for both current and former employees. This penalty is capped at £20,000 per employee. 

 

If the arrears total more than £100, employers will be named and shamed to act as a warning to other employers. 

 

There are four main areas where employers will be named and shamed to act as a warning to other employers. 

 

There are four main areas where employers were breaching legislation:

  1. Provision of benefits such as as accommodation. Where rent-free accommodation is provided, the accommodation offset is seen as income and added to pay for national minimum wage calculations. However, any rent paid by the employee should be deducted from the wage. 
  2. Incorrect deductions from pay, for own goods, products and food or salary sacrifice. 
  3. Deducting the cost of a uniform or equipment required to carry out a role, where these are not provided by the employer. 
  4. Volunteers. HMRC is challenging whether individuals are truly volunteers or actually workers for NMW purposes. Any such arrangement needs to be very carefully worded. For example, there can be additional complications with casual workers and temporary staff. 

 

The minimum wage sets out the lowest hourly rate a worker can be paid by law. The rates are decided by the Government annually. The National Living Wage (NLW) is the lowest that anyone aged 25 and above can be legally paid an hour. The current minimum wages are: 

 

Age
Hourly rate as of 01/04/2019

25+ (NLW)

£8.21

21-24  (NMW)

£7.70

18 – 20 (NMW)

£6.15

16 – 17 (NMW)

£4.35

Apprentices

£3.90