Government launches consultation on salaried hours work and salary sacrifice schemes
The government has issued a consultation on whether national minimum wage legislation should be amended to make it easier for employers to rely on the provisions for salaried hours work.
In addition, the consultation considers the impact of national minimum wage rules on salary sacrifice schemes.The consultation closes on 1 March 2019.
Some of the conditions required to satisfy the definition of salaried hours work are complex and make compliance with the legislation difficult. Employers in the hospitality and retail sector have reported that the two permissible pay cycles (weekly or monthly) do not reflect common business practice as staff are often paid fortnightly, or four-weekly in these sectors. In addition the definition of a "calculation year" is complex, and the exclusion of overtime pay and other premia can make it difficult for employers to offer attractive pay packages to workers.
As a result the government is asking for views on whether the payment cycles should be changed, whether it would be helpful to introduce a single calculation year for all workers of the same employer, and whether the rules should be amended to include overtime and other premia in remuneration for basic hours.
The consultation also asks employers to give their views on the benefits and risks of offering salary sacrifice schemes. Some employers have been withdrawing salary sacrifice schemes to avoid non-compliance with the NMW, and the consultation asks them to state whether they have withdrawn any such schemes in the past 12 months in light of NMW compliance fears.
This article is taken from HR Law - January 2019.