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Compliance / Audits
A massive regulatory framework sits behind everything we do in HR and from time to time particular elements become focus areas for the regulatory authorities and HMRC. We want to help to take away the fear factor associated with a formal audit by uncovering potential issues and recommending proactive remedial action wherever possible. Our focus is currently on helping you with the National Minimum Wage (NMW) and National Living Wage (NLW) audits being prioritised by HMRC, which could result in liability for 6 years’ worth of back pay, up to £20,000 penalty payments per employee (calculated at 200{bd7155c860700cde7a0c45963e3d134e65b37f208d58eb50b198d93d113889fe} of the underpayment) and reputational brand damage. Last year Argos, Debenhams, John Lewis, Primark and Sports Direct were all named and shamed in the media for facing fines following breaches of the Regulations, but no-one is safe – small businesses have been named and shamed for total underpayments of less than £100. Reputable businesses do not knowingly sell-out their employees by paying them less than the minimum wage, however, HMRC are catching businesses out for unconscious ‘technical’ breaches ~ for example where NMW employees face a deduction for company uniforms, or are forced to wait for 15 minutes post shift to undergo security checks (which is actually construed as ‘working time’). It can also happen due to legitimate and lawful deductions being made from gross pay such as salary sacrifice schemes for pensions and childcare, which all reduce gross pay for the purpose of HMRC calculations under the Regulations. Technical breaches might also occur because of ambiguity in contracts of employment. The most common error is for you to believe your employees to be salaried workers but their contracts fail to include a precise number of hours in their records. HMRC will then argue that the employee is an ‘unmeasured worker’, which can make the resulting NMW calculation less favourable, as a yearly average is not used. We can limit your exposure by taking urgent proactive steps, come to a new Horizon.
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