Businesses ‘need guidance on salary changes’

By Emily Hawkins contact

- Last updated on GMT

Sector-specific: businesses are unintentionally falling foul of regulations, trade bodies reiterated
Sector-specific: businesses are unintentionally falling foul of regulations, trade bodies reiterated

Related tags: National minimum wage

Pub trade bodies have warned that proposals to change national minimum wage regulations on salaried workers must include clear guidance to businesses.

The Department for Business, Energy & Industrial Strategy (BEIS) closed its consultation into NMW rules​ last week, after seeking opinions on whether rules unfairly penalise businesses without generating any benefits for employees.

UKHospitality said enhanced guidance was needed to prevent companies mistakenly believing they were compliant while the BBPA said more flexibility was needed.

UKH supported a crackdown on businesses failing to pay NMW but clarity and flexibility were needed, chief executive Kate Nicholls said.

Nicholls said: “Recently, we have seen some of our members punished because HMRC compliance officers appear to be making up the rules as they go along. Businesses have ensured that they comply with the rules and then the goalposts move again.”

Mistakes and misunderstandings

Guidance should be introduced “as soon as possible”, to avoid businesses being “tripped up by random interpretation”.

“Arrangements such as voluntary sacrifice schemes are a benefit that employers offer, but the current rules around them have led to businesses withdrawing policies that benefit employees – this cannot be right,” she added.

The Government’s proposals on payment frequency for salaried workers was welcomed by the body.

Working practices in the pub sector have changed considerably since the introduction of the NMW, Brigid Simmonds, chief executive of the British Beer & Pub Association, said.

The sector is now a “more flexible, agile environment where employees and employers increasingly seek a better work-life balance”.

“For these reasons, it is not always easy to specify or record exact salaried working hours, making compliance with the current rules – which set out annualised hours, rather than the weekly contracts often offered in pubs – difficult and meaning that they don’t always benefit the workers that they seek to protect.”

Weekly payments

Additional payment cycles for NMW employees, which match an employer’s payment cycle, should be introduced to avoid such problems, the BBPA said.

It added: “This will help with compliance by reducing confusion and complication, decreasing the risk of unintentional errors when it comes to NMW rules, which can only be corrected within a week for those on weekly paid contract, rather than a month for those paid on longer contracts.”

Employers may move from weekly payments if they are unsure of the current rules, something that could damage the pub business’s reputation, Simmonds said.

Businesses should also be able to choose a standard year for salary purposes, as opposed to a single national year, she said.

Salary sacrifice schemes 

It was hard for some to access the benefits offered by salary sacrifice schemes under the current system.

Simmonds explained: “For example, a pub chef’s knives that, due to the chef’s skills and preference for the tools they use are often their own personal property, or an offer for employees to live in employer-owned accommodation, which can be a mutually beneficial arrangement.

“If an employee is on or just above the national minimum wage, it is almost impossible to offer salary sacrifice schemes like these.

A return to sector-specific guidance is needed, Simmonds said.

“What’s needed to rectify this is sector-specific guidance from the Government, which existed for many years, but was removed for reasons of better regulation.

“We are disappointed that after considerable progress was made in collaboration with HMRC to develop new guidance, it was withdrawn without an explanation as to why.”

Related topics: Legislation

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