Coronavirus and the National Minimum Wage

24th March 2020

The Department for Business, Energy and Industrial Strategy (BEIS) has issued a bulletin addressing the issue of coronavirus in relation to the National Minimum Wage (NMW) and the National Living Wage (NLW).

The bulletin confirms that, despite current circumstances, employers still have a responsibility to pay at least the NMW / NLW to workers, and that workers cannot forfeit their entitlement to the NMW / NLW.

During this period, HMRC will continue to respond to the complaints of workers and to protect workers’ rights. HMRC aims to provide further education for employers and will still be asking employers to self-correct in appropriate circumstances.

Job Retention Scheme

The government has received questions relating to situations where workers are temporarily not working or having to work reduced hours, but where the employer wishes to continue paying them.

The advice is that, if this is related to coronavirus, businesses investigate whether the Coronavirus Job Retention Scheme is applicable.

Pay advances or employee loans

For employers considering pay advances or employer loans for their workers, the guidance given is as follows:

Pay advances – Workers can be paid an advance of pay at any time. These arrangements should be recorded correctly, e.g. on payslips or written agreements between parties, to ensure that workers are paid at least minimum wage rates for any time that they do work.

Future deductions from employee pay to recover the previous advance of pay, if clearly recorded, will not reduce a worker’s pay for NMW / NLW purposes. Similarly, the advance or the loan does not count for NMW / NLW purposes in the period in which the money is paid to the worker. The worker still needs to be paid at NMW / NLW or above for the hours they have actually worked, even in pay periods in which they receive a loan or advance.

Employer loans – If an employer loans an amount to a worker, any deductions linked to the repayment of this loan will not reduce the worker’s minimum wage pay. Again, the crucial point is that any loans should be clearly documented.

Guidance

There is guidance available on National Minimum Wage legislation at Gov.UK.

The Advisory, Conciliation and Arbitration Service (ACAS) can also be contacted on 0300 123 1100, and they can give advice to both employers and workers.

The HMRC Community Forum is another resource that can be used to ask questions in relation to NMW / NLW.

It will be interesting to see if the government decides to delay the forthcoming increase to the National Minimum Wage and National Living Wage due to the economic uncertainty being caused by the Coronavirus.

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