National Minimum Wage compliance approach
As part of the NMW compliance approach outlined in the December 2023 Employer Bulletin, HM Revenue and Customs (HMRC) NMW team are contacting employers, based on geographical location rather than business type.
This enables NMW support across a whole range of businesses in a specific area. The HMRC aim is to raise awareness and increase knowledge of the complexities of the National Minimum Wage (NMW) legislation and support employers to get things right, reducing the risk of non-compliance. So far they have visited 10 locations with many more planned.
What does this support look like
They provide employers with education and guidance on common NMW issues, encouraging employers to review pay arrangements to make sure they are complying with the law.
Some employers will also be offered a free call with one of HMRCs NMW experts to talk about business practices that can lead to NMW underpayments.
If any potential issues are identified, they will give them the opportunity to correct them with no sanctions being applied, for example no penalties or public naming.
What to do if you receive a letter
HMRC say that If you, or your agent (if they are your registered business address) receive a letter from them, to take action to review the workforce and check that they are all being paid at least the minimum wage.
HMRC claim that they recognise that mistakes are easy to make, and employers may not always be aware if something has gone wrong.
Although paying the correct rate of pay is important, it is not always that simple and there are lots of ways workers who are paid at or even above the National Minimum Wage or National Living Wage, can be underpaid. Even employers paying the real living wage may be paying less than NMW under the required calculations.
Examples include:
- deductions from pay for items in connection with the job
- unpaid working time, including travelling and training
If an employer receives a letter inviting them to take part in a free support call with one of the HMRC experts, they strongly encourage the employer to take up the offer. Feedback from the circa 2500 businesses that have taken part in a call so far has been extremely positive.
Businesses in the selected area that choose not to take action, or participate in the call when offered, do run the risk of HMRC’s NMW team undertaking an official full review of their business. The usual sanctions would apply if any underpayment of workers is identified.
More information on calculating and enforcing the minimum wage is available.
The HMRC NMW team also have a suite of recorded webinars available on how to avoid common mistakes, record keeping and what to expect from a HMRC check.
Compliance with National Minimum Wage is not about the rate of pay paid, but about the rate received for all relevant working time (whether paid or unpaid).
PAYadvice.UK 6/12/2023