The government has launched a consultation into the National Minimum Wage (NMW) rules regarding salaried workers and the operation of salary sacrifice schemes.

The consultation seeks views on proposed changes to the NMW Regulations which relate specifically to salaried hours work and where employers feel NMW rules unfairly penalise them without generating any benefit or protection for workers.

In order for work to be classified as salaried hours work, four conditions must be satisfied. However, feedback from businesses, particularly in the hospitality and retail sectors, suggests that some of these conditions are complex, restrictive and make complying with the legislation difficult.

As such, the government would like views on whether, and if so how, it might amend the Regulations to include additional payment cycles and fixing the definition of the calculation year for employers, without any detriment to workers.

The second part of the consultation concerns salary sacrifice schemes. These schemes are used when a worker agrees with an employer to a lower rate of gross pay in exchange for goods or services and include restrictions that prevent employers from agreeing a lower rate of gross pay than the minimum wage.

There have been reports that some employers are withdrawing these schemes to avoid non-compliance and underpayment of the NMW or that these schemes are not being offered to workers on low pay. This consultation also seeks views on the practical operation of these provisions and their effect on workers on the minimum wage.

This is a very timely consultation given the plight of Iceland Foods, which has been accused of breaching NMW rules over its Christmas savings scheme.

HMRC reportedly warned the retailer that it could owe £21 million in backpay for underpaying its staff over a six-year period, a claim that the company disputes. This is despite employees voluntarily choosing to be part of the savings scheme.

The consultation into the NMW rules regarding salaried workers and the operation of salary sacrifice schemes closes at 11:45pm on 1 March 2019.

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