The government has announced a number of changes to the national minimum wage (NMW) regulations in a bid to tackle criticisms previously levied at the rules.

Salary sacrifice

Employers offering salary sacrifice and deductions schemes will no longer be subject to financial penalties if the scheme takes pay below the applicable NMW rate. This will include benefit schemes where staff buy products from their employer and pay for them via salary deductions. However, the waiver will be subject to strict criteria – including that the worker has consented to the deduction or reduction in salary. Deductions for uniform and other items connected with the worker’s employment are not included. Employers will still be required to pay arrears if such a scheme takes the worker’s pay below the NMW rate.

Salaried hours workers

The government is also changing the NMW regulations to widen the range of pay arrangements covered by the “salaried hours workers” category. Salaried hours workers are those who receive an annual salary in equal instalments for a set number of contracted hours. Under the changes, workers who are paid hourly or per day, and consequently often have different pay cheques every month (such as those in the retail industry), can be classified as salaried workers. The changes aim to provide more flexibility in how salaried workers are paid, without reducing protections for workers. Businesses employing workers on “salaries” are therefore less likely to be caught out by NMW legislation due to the variation in hours from one month to the next.  However, care will still be necessary to ensure compliance.

Name and shame scheme

The government has also decided to resume the naming of employers who fail to pay their workers NMW or National Living Wage. The scheme, which was suspended in 2019, will now only apply to those employers who owe more than £500 in NMW payments. Previously, the threshold was just £100.

These changes are expected to come into force on 6 April 2020, subject to the usual Parliamentary approvals.