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PayStream’s opinion – An update of what’s been going on in our industry

Paystream News

Thursday 10th Oct, 2013

NMW and pay day by pay day models

As of the 1 October, the National Minimum Wage ('NMW') for workers aged 21 and over will increase to £6.31 (£5.03 for workers aged at least 18). This includes temporary workers on agency payroll or working through umbrella companies. At the same time new HMRC rules allow HMRC to publicly name and shame those who break NMW laws. Vince Cable announced that "By naming employers it is hoped that bad publicity will be an additional deterrent to employers who would otherwise be tempted not to pay the NMW. This is on top of financial penalties which employers already face if they fail to pay NMW".

It will be interesting to see whether HMRC use the new rules to name companies operating Pay Day by Pay Day Tax Relief Models and Dispensations. HMRC has previously attacked such models - statement in July 2011 - stating that they are not compliant with tax and Social Security legislation. It would seem an obvious next step to name the companies using such models with a view to discouraging staffing agencies from referring workers to them.

This means the minimum rate a contractor can work through the umbrella is now around £8.50.

Conduct Regulation Reforms postponed

The rumour from Whitehall is that the draft legislation for replacing the existing Employment Agencies Act and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 is now likely to be published in early 2014. The original plan was that this would be ready for circulation this autumn. The legislation is intended to simplify some of the rules and to reduce red tape for staffing companies.

The reason for the delay is understood to be that the Department for Business Innovation & Skills (BIS) is still considering how best to draft and implement the changes it has in mind taking into account available time to run a new Bill through Parliament.

In the meantime BIS has confirmed that it will shortly be publishing individual responses to the consultation, which closed earlier this year. It also intends to make public details of the interim enforcement regime, which will apply until any new legislation comes into force.

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