26 April - Ask ICAS: Navigating the National Minimum Wage with your clients – a practitioner’s guide
National Minimum Wage governance should be straight forward. After all, it’s just pay and hours, isn’t it? Sadly, it’s not so simple, but thankfully, Ask ICAS is here to help you understand the complexities.
Join Jeni Morris, Head of EY’s National Minimum Wage Team, for a session covering everything from understanding who the NMW applies to, where recently named-and-shamed companies got it wrong and what the Single Enforcement Body means for you and your clients.
(Duration <1 hour. Originally recorded on 26 April, 2022.)
Q&A session answers
What happens to employees on annualised hours?
An annualised hours contract is an employment contract where the employee’s working hours are calculated on an hourly, rather than daily or weekly, basis and those hours are at times stipulated by the employer during the year. The contract must contain the “ascertainable” number of hours that the employee is expected to work in the year, the employer must perform an annual NMW calculation to ensure there are no NMW breaches.
Annualised contracts are usually considered to be ‘salaried’ however, there are exceptions which may change the worker category to ‘unmeasured’ for example when monthly commission is also received. Unmeasured NMW calculations are required each individual pay period include the actual number of working hours in the period.
Where an employer pays the Real Living Wage (RLW) rather than the NMW - with RLW being a higher hourly rate - is it incorrect for an employer to think they are 'safe' from NMW rules?
Paying the Real Living Wage does not in itself ensure that you are not breaching NMW rules. Due to the many complexities and technicalities within the legislation, care should be taken to ensure that an employer has identified the correct NMW worker category as this will determine the type of NMW calculation which is required. There are four worker categories, salaried, time, unmeasured and output. The frequency and elements to include in NMW calculations vary according to the worker category.
Common areas of risk include:
- Identifying all worker time
- Including only the allowable pay elements and deductions
- Salary sacrifice reductions
- Dress code policy requirements.
What will HMRC do if you do not have time records for your salaried employees?
Evidencing the actual hours worked is critical to demonstrate that a business is paying at least NMW rates. However, if an employer is not able to provide evidence of the actual hours worked HMRC will interview a number of current and former employees to see if there is risk of additional working hours being performed. They will often analyse TOIL and flexi records along with any additional digital records such as computer logging in and out data to establish the correct working time.
Key themes and topics
- Understanding the NMW and who it applies to
- Getting it wrong – a costly business
- Some recent naming and shaming – what did they do wrong?
- Navigating NMW – key areas of interest for NMW Compliance
- Amended regulations in 2020 – what’s changed?
- What is the Single Enforcement Body and what does it mean for me and my clients?
- Chair: Justine Riccomini, Head of Tax (Employment & Devolved Taxes), ICAS
- Jeni Morris, Head of National Minimum Wage Team, EY
Jeni is Head of EY’s specialist National Minimum Wage Technical team. She gained her extensive experience in this specialist area during several years working within HMRC’s core NMW team. Prior to joining EY, she formed her own NMW consultancy practice to further support businesses in understanding the myriad of HMRC rules and laws governing the NMW/NLW.
Jeni’s rare combination of skills and knowledge gained from working on ‘both sides of the fence’, provides a unique perspective enabling her to mitigate the financial and reputational impact of ongoing or pending NMW investigations. She has built excellent relationships with policy leads within The Department of Businesses, Energy, and Industrial Strategy, HMRC and the Low Pay Commission and is often asked to speak and share her experiences at national conferences and events.
(Please note that views and opinions expressed by speakers at ICAS webinars are their own and not necessarily reflective of ICAS’ views.)
Who’s this for?
- ICAS Members
- CAs in practice
- CAs in business
- CA Students
- Employment tax and payroll professionals
Counts as CPD activity
Depending upon your individual role and training and development needs, watching this webinar can count towards your annual Continuing Professional Development (CPD) requirement.