HMRC have recently announced a raft of measured aimed at employers to ensure they comply with the requirements to pay the National Minimum and National Living Wages. Specific sectors are being targeted with HMRC doggedly following up on all complaints.
The current rates for 2019/2020 NMW are as follows:
25 and over £8.21
21 to 24 £7.70
18 to 20 £6.15
Under 18 £4.35
Apprentice £3.90
Failure to pay these rates will certainly put employers to the top of HMRC’s list for a visit. HMRC have a ‘super-computer’ called Connect which reviews all RTI PAYE submissions made by employers to ensure rates are correct, so there is a ‘Big Brother’ and it is monitoring what employers are paying!
HMRC focus on specific sectors
HMRC’s recently released document, ‘National Living and National Minimum Wage – Government evidence on compliance and enforcement 2017/2018’, has confirmed the sectors of the economy that they are currently targeting.
- Social Care
- Retail
- Commercial Warehousing
- Gig Economy
And here’s something that every employer should be mindful of and act upon … HMRC responds to every single worker complaints conducting proactive and targeted enforcement of at risk employers.
This means that every telephone call and every letter from employees and ex-employees are followed up by HMRC. Such activity from HMRC is very time consuming and intrusive. Of course employers cannot prevent employees from making a complaint to HMRC, however a significant number of those complaints are made by disgruntled former employees.
What should you do if a complaint is made against you?
Employers who are fully compliant should not fear such HMRC activity, but I would recommend that all necessary procedures are in place to prove to HMRC that the NMW and NLW requirements are fully met.
It will become clear to HMRC very quickly if an ex-employee is trying to cause their former employer problems.
Why the focus on specific sectors?
The sectorising of groups of employers is an important part of HMRC’s work, targeting sectors where wages tend to be paid at or around the basic rates.
The Social Care sector is a particular interest to me. We have numerous clients in this sector and I have been actively involved in one particular HMRC review in respect of sleep-ins. This has now been ongoing for nearly two years.
Admittedly the enquiry has been delayed by HMRC refusing to engage in detailed discussions because of the recently cases that have gone through the Tribunal system, however this highlights that employers can be under the microscope for a significant amount of time.
Some clarity on sleep-ins
HMRC have finalised and issued guidance following the Court of Appeal hearing in the case of Royal Mencap Society v Tomlinson-Blake (which incidentally is now going before the Supreme Court)
The guidance sets out the following:
- Where workers are required to stay at or near their workplace on the basis that they are expected to sleep for most or all of the period, but may be woken when required to undertake work:
- If the employer provides suitable facilities for sleeping, the minimum wage must be paid for time when the worker is required to be awake for the purpose of working, but not for time the worker is permitted to sleep.
- If suitable sleeping facilities are not provided then minimum wage must be paid for the entire shift.
- The position is different where workers are working and not expected to sleep for all or most of a shift, even if there are occasions when they are permitted to sleep (such as when not busy). In this case it is likely minimum wage must be paid for the whole of the shift on the basis that the worker is in effect working all of that time, including for the time spent asleep.
- The guidance emphasises that each case may be different depending on all of its individual circumstances, including what the contract provides and what is happening in practice.
What happens when HMRC consider that there has been an error with the payment of NMW and NLW?
If HMRC think that errors have been made, firstly the employer will be required to correct the employees pay, making any additional payments to the employee. Based on the employers’ behaviours, HMRC will also consider a penalty of 100% of the amounts of the total underpayment to the workers found to be underpaid.
So, if an employer has been hit with a financial penalty, is that the end of the matter?
Unfortunately not.
HMRC will also name and shame employers, regularly publishing the names of all employers that flout the regulations. This can have the largest detrimental effect to employers.
So, in summary, we cannot stop HMRC activity in this field but by regularly checking rates paid, together with such issues of travelling time, sleep-ins and round sum payments made to employees, employers can minimise the amount of time and effort that HMRC put into a NMW/NLW enquiry.
If you would like advice on NMW / NLW and how it applies to your employees, contact Paul Chappell, Head of Legislation and Compliance, on 03331 123456
