Salary sacrifice minimum wage

Pat38493

Does the rule that you can't salary sacrifice below minimum wage apply on an annual or monthly/weekly basis?

i.e. can I decide to sacrifice my entire salary in the last tax calendar month of the tax year if I have the cash flow available?

Linton

Pat38493 said:

Does the rule that you can't salary sacrifice below minimum wage apply on an annual or monthly/weekly basis?

i.e. can I decide to sacrifice my entire salary in the last tax calendar month of the tax year if I have the cash flow available?

No - the minimum wage restriction applies to each wage payment, not annually.

Marcon

To add to Linton's helpful answer...

An employer must pay the minimum wage, on average, for the time worked in the pay reference period.Pay reference periods are usually set by how often someone is paid, for example one week, one month or 10 days. A pay reference period can't be longer than 31 days. 

Pat38493

Marcon said:

To add to Linton's helpful answer...

An employer must pay the minimum wage, on average, for the time worked in the pay reference period.Pay reference periods are usually set by how often someone is paid, for example one week, one month or 10 days. A pay reference period can't be longer than 31 days. 

So is this easy to work out then if I'm paid every month?  What would be the minimum wage right now that I couldn't go under?

Google says it is £10.42 per hour so does that mean for example in July, I could not take my pay below £2344.50 for the month if I was contracted to work 7.5 hours per day 5 days per week?

QrizB

Pat38493 said:

Google says it is £10.42 per hour so does that mean for example in July, I could not take my pay below £2344.50 for the month if I was contracted to work 7.5 hours per day 5 days per week?

The calendar month of July has 21 working days (assuming you mean Mon-to-Fri) so I think your minimum wage value would be £1641.15?

I've certainly salsac'd down to less than £2k pm on occasion without any complaints from payroll. My contract is almost the same as your example.

Pat38493

QrizB said:

Pat38493 said:

Google says it is £10.42 per hour so does that mean for example in July, I could not take my pay below £2344.50 for the month if I was contracted to work 7.5 hours per day 5 days per week?

The calendar month of July has 21 working days (assuming you mean Mon-to-Fri) so I think your minimum wage value would be £1641.15?

I've certainly salsac'd down to less than £2k pm on occasion without any complaints from payroll. My contract is almost the same as your example.

And if I have a car allowance on which the pension contributions are not assessed, that doesn’t matter right?  Since I would be paying NI on the car allowance, the £1161.15 figure in the example you give could include the car allowance in the total?

QrizB

I don't know enough to comment on how your car allowance is treated, sorry.

Marcon

An employer cannot count the value of a benefit in kind such as a car or petrol towards its obligation to pay the national minimum wage. Allowances don't generally count towards minimum wage pay unless they are consolidated into a worker's standard pay or they relate to a worker's performance.

Pat38493

Marcon said:

An employer cannot count the value of a benefit in kind such as a car or petrol towards its obligation to pay the national minimum wage. Allowances don't generally count towards minimum wage pay unless they are consolidated into a worker's standard pay or they relate to a worker's performance.

ok, so since the car allowance is itemised as a separate item to the monthly salary, it doesn't count when estimating the level that I could sacrifice down to.  Thanks.

Pat38493

Pat38493 said:

Marcon said:

An employer cannot count the value of a benefit in kind such as a car or petrol towards its obligation to pay the national minimum wage. Allowances don't generally count towards minimum wage pay unless they are consolidated into a worker's standard pay or they relate to a worker's performance.

ok, so since the car allowance is itemised as a separate item to the monthly salary, it doesn't count when estimating the level that I could sacrifice down to.  Thanks.

As a kind of point of order here, how would the company actually get into trouble for not paying minimum wage to me?  If they would only get into trouble if I personally complained, and I had no intention of complaining because I am doing it on purpose, I guess that wouldn't make any difference?  Would payroll systems typically block this automatically with some kind of error "computer says no".

Jonboy_1984

Pat38493 said:

Pat38493 said:

Marcon said:

An employer cannot count the value of a benefit in kind such as a car or petrol towards its obligation to pay the national minimum wage. Allowances don't generally count towards minimum wage pay unless they are consolidated into a worker's standard pay or they relate to a worker's performance.

ok, so since the car allowance is itemised as a separate item to the monthly salary, it doesn't count when estimating the level that I could sacrifice down to.  Thanks.

As a kind of point of order here, how would the company actually get into trouble for not paying minimum wage to me?  If they would only get into trouble if I personally complained, and I had no intention of complaining because I am doing it on purpose, I guess that wouldn't make any difference?  Would payroll systems typically block this automatically with some kind of error "computer says no".

HMRC actively look for it during their routine inspections, and go over last three years payroll typically.
 

They both fine and name and shame employers who they find falling short.