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Government reinstates NMW defaulters naming scheme

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The government is reviving the naming scheme for employers who break national minimum wage (NMW) law. The scheme was first introduced in January 2011, revised in October 2013, then paused in July 2018 to enable a full review.

The scheme is to recommence in 2020 with certain revisions. Under the revised scheme, the government will:

  • increase the arrears threshold above which employers will be considered for naming from £100 to £500;
  • provide more information about reasons for breaches;
  • publish an educational bulletin for employers, highlighting common reasons for underpayment; and
  • name employers more frequently than previously.

Where an employer breaks minimum wage law, HMRC will issue a notice of underpayment (NoU) setting out the arrears to be repaid by the employer together with the penalty for non-compliance. The employer will have 28 days to appeal against the notice. If the notice remains unpaid 28 days after issue and no appeal has been lodged, HMRC will refer the case to solicitors to commence recovery action, at which point HMRC will also refer details to BEIS to consider naming.

A lower arrears threshold of £100 will be considered for naming in certain cases involving persistent offenders.

BEIS has updated section 5 of its policy document, HMRC enforcement, prosecutions and naming employers who break national minimum wage law (, to reflect the changes to the scheme.

Following a consultation which ran between December 2018 and March 2019 on changes to the NMW regulations in relation to salaried hours work and salary sacrifice (, the government has decided to waive financial penalties for certain breaches of NMW rules for salary sacrifice and pay deductions. Provided certain conditions are met, only repayment of arrears will be required and employers will be exempt from the naming scheme. A key condition will be that employees have consented to inclusion in a salary sacrifice scheme.

In addition, the government is making three changes relating to salaried hours workers. Under current rules, salaried workers must be paid an annual salary for working a particular number of hours over the course of a year and paid in equal instalments. The changes will widen the range of pay arrangements that are compatible with the rules to increase flexibility for workers and employers. This will allow employers to:

  • pay salaried hours workers in additional equal instalments, such as fortnightly or four-weekly;
  • choose a calculation year for their workers; and
  • make premium payments to their salaried hours workers in respect of basic hours, specified in the workers’ contracts, which will not form part of the workers’ remuneration for calculating NMW pay.

These changes are contained in the draft National Minimum Wage (Amendment) (No 2) Regulations 2020, expected to come into force on 6 April 2020 (see

Issue: 1475
Categories: News