DLME Strategy 2020-2021: CIPP call for joined up guidance to aid employer compliance

27 January 2020

In its submission to the Director of Labour Market Enforcement (DLME) Strategy 2020-2021: Call for Evidence, the CIPP calls for more comprehensive guidance that draws together common themes that are governed by different regulations and legislation in a bid to strengthen BEIS employer guidance on NMW, HMRC guidance on Tax and NIC reporting, and the HM Court and Tribunal Service on the subject of deductions permitted when administering Pay Attachments, which remains a common area of error.

Samantha Mann, CIPP senior policy and research officer, comments:

“The CIPP does not condone intentional non-compliance and criminal activity that is typically representative behaviour of the most egregious employers, however, our response seeks to highlight just a small number of the key challenges that impact employers who strive to achieve full compliance, within the complex structure of legislation that governs worker rights and mirroring employer obligations across the UK. Employers who seek to provide fair working conditions and accurate take home pay to their employees and workers need robust guidance, support and education materials that are comprehensive and fit for purpose.”

Recommendations

Common themes

We have observed a slight increase in education delivery e.g. webinars through the HMRC Talking Points programme regarding NMW administration. However, anecdotal evidence suggests that experiences at the coalface when faced with an NMW inspection, reveal problem areas that could have been avoided had guidance and information been more ‘joined up’.

An example would be uniforms. This subject has relevance to the employer from a tax and NIC reporting perspective, to the employee from a tax relief perspective and for the self-employed, from an allowable expenses perspective. However, the rules surrounding uniforms from a tax and NIC perspective can be complex to understand. Compare this to the broad definition used when describing a uniform for NMW purposes, and an area for error and mistake quickly arises.

Deductions from pay for pay attachments issued by the courts and others, also give rise to error as HMRC have strictly defined these as deductions made ‘for the benefit of the employer’ and yet, because they are permitted to be made - as highlighted in the pay attachment notice, the unwary employer falls foul where the employee is paid at or around the NMW rate. This continues to capture the unwary.

Guidance and educational materials should cover the different impact that varying policies have on common themes and subjects – this would be a new provision and require significant cross-government working. Stakeholders could provide significant help in this endeavour.

Sectoral guidance

The technical operation of NMW (and PAYE and NIC) does not largely vary across sectors. However, useful directed case studies and examples within guidance and information (whatever media is used) could aid the employer to understand and apply the rules correctly as explained in BEIS guidance. Particularly where that guidance is in HTML format online.

Impact of legal rulings

Where court rulings set legal precedence, the impact on the operation of NMW (and other subjects) should be made clear by BEIS and HMRC at the earliest opportunity. Media campaigns should be used to raise wide awareness of the impact, together with prompt updates to operational guidance and education materials. The delays that have been experienced in recent years across many policy subjects are unacceptable.

Whilst the media should not be relied upon to cascade critical technical information without direction (which can lead to mis-information and confusion), neither BEIS nor HMRC fully utilise the efficiency of stakeholders to cascade important and accurate messages and updates in the interim, while they work to update their library of employer information, education, support materials and resources.

Stakeholders and employer support mechanisms

 When an employer takes on their first employee or worker, no longer can they work to comply in isolation with the myriad of legal obligations that is placed on them.

On the contrary they need a significant support mechanism in order to deliver and stay up to date as they attempt to provide compliant payroll and HR services, as a minimum that will include:

  • Payroll providers, bookkeepers and accountants
  • Software developers
  • Legal/HR services
  • Banking services

Guidance and technical information, therefore, needs to be provided at appropriate levels and at a time that recognises the needs of the users – a prime example of where this process is not as robust as it once was, and thus is failing employers, is for software developers who support all stakeholders, and are key in ensuring the compliant chain.

The response can be read in full at policy hub.

 Mann further commented:

“We know from the Queen’s Speech that it is the intention of this Government to strengthen worker protection with the creation of a Single Enforcement Body and so now is the time to ensure that equal education, guidance and support is provided to serve the employer community who seek to pay their employees and workers on time and accurately.”

 


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