Jessica O'ConnorBusinesses will face a growing compliance risk when new National Minimum Wage (NMW) rates come into force in April, accountancy and business advisory firm BDO has warned.
According to the latest BDO survey, 98% of mid-market businesses said that that the proportion of their staff earning within £2 per hour of the National Minimum Wage would rise when new rates come into force.
From 1st April this year, the National Living Wage (for those aged 21 and over) will rise by 6.7% to reach £12.21 per hour.
Meanwhile, the National Minimum Wage rates for those aged 18 to 20 will rise 16.3% to £10 per hour, while under 18s will be entitled to £7.55, up 18%.
These above inflation rises will mean employers will have a greater proportion of staff paid at levels closer to the NMW rates, increasing their risks of non-compliance.
If incentives such as pension or other salary sacrifice schemes push employees below the minimum wage floors, this can bring the risk of HMRC sanctions such as penalties of up to 200% and being named and shamed.
Caroline Harwood, head of employment tax at BDO, said: “Those employers who have historically paid wages above the minimum levels may now find themselves in a position where they have to pay close attention to the rules to ensure they are NMW compliant.
“There are a number of risk areas for employers to consider – notably around salary sacrifice, deductions for uniforms or accommodation, or memberships of savings clubs that could in certain circumstances tip them over the threshold into non-compliance.
“All too often, we see household names appearing on the list of companies judged to have breached the National Minimum Wage rules, many of whom are likely to have been tripped up on technicalities.”
