Recent penalties handed to businesses, including Five Guys and B&Q, highlight how complex it is to maintain Minimum Wage-compliance. Despite this, smaller businesses and organisations can stay compliant, according to Drummond Laurie Payroll specialist Fiona Ireland.
Catch up on part 1 of Fiona’s Minimum Wage-compliance series, looking at payroll mistakes relating to work expenses, training, accommodation and staff benefits.
Payroll mistake 6: Travel and transport
If your business provides employees with transport services and the cost is deducted, this can reduce their minimum wage pay. This is the case where the employer is effectively paying its own transportation costs through the deduction from employees.
Payroll mistake 7: Tips and service charges
For the hospitality sector, the treatment of tips, service charges and cover charges is clear-cut: these cannot be counted towards minimum wage. However, there is a common misconception that they can be included.
Payroll mistake 8: Overtime and irregular hours
The impact of overtime and/or irregular hours on minimum wage compliance can be significant. National minimum wage compliance should be checked against the relevant pay reference period. Employers cannot simply look at the employee’s headline annual salary and determine compliance that way.
Generally, pay reference periods cannot exceed 31 days.
Payroll mistake 9: Age and apprentice status
To maintain minimum wage compliance, payroll must have the correct age/rate recorded. The business must also check that the apprentice does qualify for the apprentice rate.
It is important to note that an employee moving into a different age band can require a payroll adjustment to maintain minimum wage compliance.
Payroll mistake 10: Salary sacrifice arrangements
Salary sacrifice schemes can be a challenge when it comes to minimum wage compliance. Why? Because a salary sacrifice arrangement can reduce the employee’s pay below the applicable minimum wage rate, even where their contractual salary is above the minimum wage rate. This applies to sacrifices across a range of options including pensions, childcare, and cycle-to-work schemes.
Employers need to check the impact of salary sacrifices on minimum wage compliance before introducing or changing an arrangement. They also cannot assume that the arrangement is automatically minimum wage compliant because an employee has voluntarily agreed to it.
Helping businesses maintain their Minimum Wage-compliance
Drummond Laurie’s specialist Payroll advisors help businesses stay minimum wage compliant across sectors like hospitality, agriculture, and many more. We can help you understand complex minimum wage rules and calculations so that payroll stops being a monthly headache.
For an initial discussion about outsourced Payroll services from Drummond Laurie Chartered Accountants, get in touch with Fiona Ireland.
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