19 October 2021
Private healthcare organisations should take note that National Minimum Wage is now being actively enforced by HMRC.
The enforcement of NMW by HMRC and the financial penalties which result for non-compliance should now be well understood by employers. The additional deterrent, whose purpose was also to raise awareness of NMW compliance, is the naming and shaming scheme published every 3 months listing those employers whose NMW underpayments totalled at least £101 going back six years.
However, the naming scheme was quietly paused by the Government in July 2018 as it sought to consult on its effectiveness. Whilst the scheme was relaunched on 31 December 2020, albeit with a new threshold of at least £501 total underpayment over the past six years, its eighteen-month absence may well have pushed NMW compliance to the back of employers’ risk registers. This may have been exacerbated by the COVID-19 pandemic, which resulted in the redeployment of many of HMRC’s NMW inspectors to the Coronavirus Job Retention Scheme (CJRS) resulting in the delay of many NMW inspections and a cessation of enforcement altogether.
Most common reasons for failing to pay NMW
In the Government’s recent naming round in August 2021, the most common reasons for employers not paying NMW were wrongly taking deductions from workers’ wages and failing to pay workers for all the time worked, most notably when working overtime. This comes as no surprise as these are usually the most common mistakes we see when reviewing clients NMW compliance practices.
It might sound fairly straightforward to calculate the amount of time worked - essentially, it will be the length of their shift. However, what is working time can be a little more complicated than that. For example, any time spent training and the time taken to travel for the purpose of training, where the training is required by the employer will usually be treated as working time for NMW purposes. More recent complications have arisen as a result of the pandemic - for example, the time it takes to put on and take off PPE will be deemed to be working time for the purposes of NMW and unfortunately, employers have sometimes not accounted for this when calculating workers’ pay. Other complications might include the requirement to undergo regular COVID-19 testing before coming into work and whether that should be deemed as working time.
So, whilst these common errors might seem quite straight forward to address and keep on top of, these examples demonstrate that changes in working practices can have an unexpected impact on NMW compliance. It is therefore crucial to ensure these risks are considered when implementing new working practices.
With the NMW naming scheme for non-compliance back up and running and NMW inspections restarting as the CJRS winds down, a failure to do so could prove costly.
If you have any concerns about NMW applying to your private healthcare organisation, please contact Charlie Barnes or your usual RSM contact.