Naming and shaming rules for NMW breaches overhauled

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The Government has reinstated the naming and shaming policy after it was stopped pending a review of the scheme. Under the revised rules, any organisation which owes arrears of more than £500 in NMW payments to their workforces will now be named.



The raising of the threshold from £100 to £500 will be supported by an increase in the frequency of public naming of non-complaint companies in a bid to improve the effectiveness of the measure as a deterrent.


The Government said that ‘the new proportionate approach will mean that some businesses falling foul of the rules by minimal sums will not be named, provided they correct any errors’.


Businesses that are caught underpaying by less than £100 will be able to correct their mistakes without being named but they will still have to pay workers back and can face fines of up to 200% of the arrears.


In 2018-19, HMRC identified £24.4m in arrears, for over 220,000 workers and raised over £17m in penalties for non-compliance.


As well as reinstating the naming policy, the government has also announced a number of amendments to the current rules to clarify compliance.


Salaried worker rule change

Some companies fall foul of the NMW rules as they employ ‘salaried workers. Salaried workers are common in the retail, hospitality and leisure sectors, where employees work variable shifts over the year, so their pay fluctuates from month to month.


The government has amended existing regulations to widen the range of pay arrangements available to businesses employing ‘salaried hours’ workers’, who are workers who receive an annual salary in equal instalments for a set number of contracted hours.


The change to salaried worker rules will come into effect from 6 April 2020, subject to parliamentary approval.


As a result, workers who are often paid hourly or per day and consequently have pay checks every month, such as those in the retail industry can be classified as salaried workers.


This will allow employers to choose a flexible ‘calculation year’ for their workers. The government hopes that this will reduce non-compliance rates as companies will be able to monitor the hours worked by salaried workers and identify potential underpayments of wages.


Salary sacrifice schemes

There has also been a change to the position on salary sacrifice schemes, which were often closed to employees earning the NMW.


New rules set to come into force from April will mean that employers offering salary sacrifice and deduction schemes will no longer be fined if the scheme brings payment below the NMW rate.


This will include benefit schemes where staff buy products from their employer and pay for these via salary deductions.


The waiver will be subject to strict criteria – including that the worker has opted into the scheme and not been forced into it by their employer.


These changes should resolve an issue for employees that offer salary sacrifice schemes. HMRC guidance previously confirmed that employers could not offer salary sacrifice schemes for benefits such as pensions, gym memberships or cycle to work schemes to those on NMW as it was the post salary sacrifice pay that was looked at for NMW compliance purposes.  


As a result of these changes, employers will now be able to make these schemes available to those on NMW so long as certain conditions are met.


Deductions of NMW for uniform and other items connected with the worker’s employment will continue to be penalised.


HMRC have published a revised National Minimum Wage enforcement policy document to reflect these changes. 


For more information on the National Minimum Wage please contact our specialist payroll department