HM Revenue & Customs’ (HMRC’s) ongoing investigations into National Minimum Wage (NMW) discrepancies continue unabated, and the rural sector remains under scrutiny.
Areas that farms, estates, equestrian and other land-based businesses should take note of are as follows:
Deductions from pay
These might take the form of deductions for goods, stabling, food or salary sacrifice arrangements for example, and the NMW must be paid after taking such deductions into account. The practice of using payroll to take these deductions has, in some instances, inadvertently caused employers to breach NMW rates. Ideally, a separate payment method outside of payroll should not cause an NMW breach, and therefore structuring payments this way is less open to error.
Provision of benefits such as accommodation
Where accommodation is rent-free then an amount (the ‘accommodation offset’) is added to pay for NMW purposes, currently at the rate of £7.55 per day. Where employees are charged rent, however, then any excess daily charges above the NMW day rate will reduce their pay for NMW purposes. Where rent charged is below the offset rate, unfortunately there is no credit given for the difference between the charge and the offset rate.
Provision of uniform or equipment
Where these are not provided by the employer, an equivalent cost can be applied as a deduction for NMW purposes to pay to represent the cost the employee has had to incur. This can apply to clothing that the employer requests that staff members wear, or items of equipment or tools of trade required to carry out their work.
In some cases, HMRC has challenged whether a volunteer is actually a volunteer or a worker for NMW purposes. Care is needed with the wording of any agreements, including any promise of a contract or paid work in the future. Volunteers can receive amounts to cover any expenses incurred, but any flat rate payments should be avoided, as this would automatically deem them to be a worker and entitled to the NMW.