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3 Steps to Stay Ahead of National Minimum Wage Legislation Changes

By alisonbarlow|Mar 20, 2024|10:44 am GMT

With 1st April fast approaching, staying compliant with legislation updates, particularly regarding the National Minimum Wage (NMW), is more crucial than ever. Employers bear the legal obligation to ensure their workers receive at least the NMW for every hour worked. Accidental non-compliance can occur under various circumstances, affecting both employer integrity and employee welfare. Here are three proactive measures operators and retailers can implement to safeguard compliance and prevent employees’ pay from dipping below the NMW rate.

Step 1: Cover Uniform Expenses

A common oversight occurs when employees are required to purchase uniforms or specific dress code items, which can inadvertently reduce their earnings below the NMW. Operators enforcing a dress code or requiring staff to buy or hire their uniforms—whether from the employer or a third party—might consider setting pay rates slightly above the minimum wage. This creates a financial buffer to cover these expenses, ensuring staff are not financially disadvantaged.

Alternatively, supplying uniforms directly to staff can be a more cost-effective solution, eliminating any need for employees to fund their work attire and ensuring compliance with NMW regulations.

Step 2: Cap Salary Sacrifice Deductions

Salary sacrifice schemes offer employees the option to exchange part of their cash earnings for non-cash benefits, such as cycle to work or EV car schemes. However, these arrangements must not reduce an employee’s final pay below NMW rates, regardless of the benefit value. To maintain compliance, employers must implement processes to cap salary sacrifice deductions, ensuring these benefits do not inadvertently lower workers’ pay beneath the legal minimum.

Fourth’s HR and Payroll platform helps employers to automate and manage the risk of non-compliance. Users can run a report on an entire workforce with just one click and see every individual’s compliance with minimum wage. The report will flag any workers who fall below the minimum wage at a given point in time – past or present – and enables employers to batch update all of them to the required pay rate.

Step 3: Ensure Accurate Time and Attendance Reporting

Even workers whose pay significantly exceeds the NMW can fall below it through unpaid overtime. This risk can be minimized by employing a robust time and attendance system. Such systems accurately monitor the hours each staff member works, ensuring individuals are compensated for all their time, including overtime. Accurate timekeeping is essential for maintaining compliance and upholding fair labor practices.

Fourth eClock

Fourth’s eClock is a digital time and attendance system, which ensures the actual hours worked by each employee is accurately captured, irrespective of what was initially scheduled.

By focusing on these areas—uniform expenses, salary sacrifice deductions, and accurate timekeeping—employers can prevent accidental non-compliance with NMW legislation. These strategies not only protect businesses from potential penalties but also reinforce a commitment to fairness and integrity in the workplace. As employment laws evolve, staying informed and proactive in compliance efforts remains a top priority for employers aiming to foster a supportive and equitable working environment.

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This resource is not a substitute for legal advice. This material is for informational purposes only, and not for the purpose of establishing a lawyer-client relationship.