Response to Consultation on National Minimum Wage and Travel and Subsistence Expenses Schemes
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30.7.2010 The government has published a response to its consultation on NMW and travel and subsistence expenses schemes. Travel and subsistence schemes run by some employment businesses and umbrellas require workers to make a salary sacrifice in return for travel and subsistence expenses payments. This provides tax and NIC savings for the workers and recruiters and the travel and subsistence expenses payments currently count towards calculating pay for the purposes of NMW. There were concerns that this could have potential adverse consequences for workers earning at or around the NMW level, including affecting workers’ eligibility for certain earnings-related benefits. There have also been worries that businesses not operating such schemes are being put at a competitive disadvantage. In February 2010 the government published a consultation document setting out its proposals and responses were sought on potential changes to the law on NMW. On 27 July 2010 the government published a report summarising the responses received to the consultation and its plans to address the issue going forwards. From 1 January 2011, the government proposes that Regulation 31 of the NMW Regulations 1999 (which lists the payments which are ignored when calculating a worker's pay for NMW purposes) is amended to specifically include travel and subsistence payments. This change will arguably provide a more level playing field, allowing employment agencies which do not run travel and subsistence schemes to compete more easily with those that do. It may also lead to the reduction in the number of employment businesses and umbrellas which decide to implement the schemes for workers earning around NMW. Practical Tip Check the arrangements you have with umbrellas and the way in which you are operating your travel and subsistence scheme to ensure it is compliant.
This bulletin is for general guidance purposes only and should not be used for any other purpose.
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