July 30, 2010
Thousands of employees are set for a minimum wage increase thanks to the termination of a widely-used employer loophole. From January 1st 2011, employers will no longer be allowed to include payments made into travel and subsistence tax relief schemes in National Minimum Wage (NMW) calculations. The policy change will mean that expenses paid to an employee for the cost of travel from home to a temporary workplace, along with subsistence costs through travel amp; subsistence schemes designed for mobile workforces, will not count as pay for NMW purposes. The changes will affect temporary workers earning up to £9 an hour. According to campaigners, employers were regularly using the loophole to avoid paying National Insurance contributions while undermining recently improved NMW standards. “This is welcome news. The minimum wage must provide a robust pay floor that supports vulnerable workers,” said TUC General Secretary Brendan Barber. “In far too many cases travel and subsistence plans have been miss-sold to workers. Rogue employers have exploited these schemes to avoid paying National Insurance and workers have ended up losing out on pension and sick pay entitlements, maternity pay and tax credits.” But not everyone has embraced the move. Leading accountancy firm Deloitte argues that the loophole creates increased employment opportunities as employers can recruit more staff on lower wages. Deloitte Tax Partner Brian White claims that the government’s actions could result in job losses from “the high tens’ of thousands to a few hundred thousand” as employers wage budgets spiral. If you feel your employer is abusing NMW standards and leaving you short-changed, speak to employment solicitors today and reclaim any wages rightfully owed.