Salary sacrifice and national minimum wage

Produced by Tolley in association with

Employment Tax

Guidance

Introduction and background

A key feature of UK employment law is that all employees must be paid at least the National Minimum Wage (NMW), or where relevant, the National Living Wage (NLW). See our National minimum wage ― overview guidance note for more. Employers must pay people who do work for them at least the NMW / NLW if they are a ‘worker’ for NMW / NLW purposes and a specific exemption does not apply to them. Workers are those essentially engaged under a contract of service rather than a contract of apprenticeship or director’s service agreement (although, it is possible for a director to have a contract of employment and a service agreement running in parallel meaning they are covered by the NMW / NLW).

Failure to comply with the NMW / NLW can not only lead to enforcement orders to compensate the workers for the wage they should have been paid but also penalties and even criminal sanctions including fines to the employer.

Further guidance on who is and is not covered

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Robert Woodward

Employment Tax Manager at Frank Hirth plc

Robert is an expert in UK employment tax matters for employers with UK based employees, including UK employees working overseas, and overseas employees coming to the UK. He has extensive experience of advising clients with regards to PAYE matters, employee benefits and social security as well as employment related payments outside the payroll functions such as termination settlements and payments to consultants and other non-payroll labour. After graduating in Politics and Law from the University of Southampton, Robert started his tax career at HMRC as an employer compliance officer undertaking enquiries into employers' expenses and benefits systems before moving into a large international practice and then into the Big 4. Here he assisted with tax investigations, flexible benefits planning, employment tax compliance and international social security. Robert has presented to various audiences and has had a number of articles published in various magazines on employment tax matters. Robert is a fully qualified member of both the Association of Taxation Technicians (ATT) and the Chartered Institute of Taxation (CTA).

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