Businesses that fail to pay their workers the National Minimum Wage (NMW) or National Living Wage (NLW) will continue to be publicly named by the Government, following a review of the scheme.
The changes, which will see naming rounds occur more often, will enhance the effectiveness of the measure as a deterrent, HM Revenue & Customs (HMRC) and the Department for Business, Energy and Industrial Strategy (BEIS) predicted.
It has also been decided that the threshold for naming employers should be increased, meaning that firms which owe arrears of more than £500 to their workforces in NMW payments will now be named.
The threshold was previously £100.
Business Minister Kelly Tolhurst said: “Anyone who is entitled to the minimum wage should receive it — no ifs, no buts — and we’re cracking down on companies that underpay their workers.”
However, she went on, the Government also wants to make it as easy as possible for employers, especially small businesses, to comply with the NMW rules, which is why it has decided to reform the relevant regulations.
Changes being introduced on 6 April 2020
These amendments include:
permitting additional payment cycles for salaried workers, including fortnightly and four-weekly cycles, providing choice and flexibility to employers and workers
allowing employers to choose the “calculation year” fit 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 Bank Holidays, without losing their entitlement to equal and regular instalments in pay.
Under these changes, workers who are often paid hourly or per day and consequently have different pay checks every month, such as those in the retail industry, can be classified as salaried workers.
Additionally, the Government has decided that employers offering salary sacrifice and deductions schemes will no longer be subject to financial penalties if the scheme brings payment below the NMW rate (which can be up to 200% of arrears). For example, benefit schemes where staff buy products from their employer and pay for these through salary deductions.
This follows a consultation on salaried workers and salary sacrifice schemes to which the Government responded on 11 February (see assets.publishing.service.gov.uk).
Comment by Croner Associate Director Paul Holcroft
Some employers may be nervous at the thought of “naming and shaming”, but they should remember that this provision is nothing new.
Although it was suspended in 2018, it appears that this was done to make the system fairer and help employers who make genuine mistakes avoid being overly penalised.
Therefore, although scrutiny continues to be placed on the underpayment of the minimum wage, it looks like the Government is prepared to take mitigating circumstances into account.
That said, employers should take care not to become too complacent. With more frequent publications expected, they should still bear in mind the potential reputational and legal ramifications from being “named and shamed”, especially if this happens more than once.
Last reviewed 17 February 2020