Change to the National Minimum Wage
Following an unsuccessful challenge from the Cordaunt Group PLC, the National Minimum Wage (Amendment) (No.2) Regulations 2010 came into force on 1 January 2011.
With effect from 1 January, the new regulation 31(1)(j) provide that:
“any money payments paid by the employer to a worker in the pay reference period in respect of travelling expenses, that are allowed as deductions from earnings under section 338 of the Income Tax (Earnings and Pensions) Act 2003”
will not count towards meeting the obligation to pay the national minimum wage.
The amendment will affect employers with staff on salary sacrifice schemes – “travel schemes” – where the worker is paid an amount towards their travel and subsistence to temporary places of work.
There will be an impact for payroll departments that use such schemes for the purposes of section 338 of the Income Tax (Earnings and Pensions) Act 2003, and employers that use these policies are advised to review their contracts to ensure they continue to satisfy the Minimum Wage Regulations.