Are you accidentally breaching National Minimum Wage rules?
Did you know that 2020 is a leap year?
HMRC's minimum wage enforcement team loves leap years. Why?
They pay particular attention to test if the 29th of February will cause an employer to breach National Minimum Wage legislation.
For a large number of salaried employees, they will work the additional day and see no effect on their pay but, where their hourly rate is close to or sits at the National Minimum Wage (NMW) or National Living Wage (NLW), businesses are being urged to ensure that the additional day in the year does not reduce employee pay to below the legal minimum. Non-compliance could result in a potentially large fine from HMRC.
Employers often base their calculations (for salaried employees) on a 52 week or 365 day period. HMRC enforce that there are not 52 weeks in a year (even more working days in a leap year), which can potentially increase the number of working hours diluting the actual hourly rates.
The penalties imposed would be:
- 100% of the wages arrears to be paid to the employee
- 200% of the wages arrears as a penalty (Maximum of £20,000 per worker)
- Named and shamed by HMRC online
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