CIPP response to NMW consultation on salaried workers and salary sacrifice

05 March 2019

The CIPP has submitted its formal response to the National Minimum Wage consultation on salaried workers and salary sacrifice.


The CIPP policy and research team published a survey (with questions that mirror those asked within the consultation paper) that offered the opportunity for payroll professionals to provide their views on the questions asked within the consultation paper. The survey ran from January until 22 February 2019 and received 177 responses. Thank you to all those who took the time an effort to contribute.


CIPP and its members wish to acknowledge the value of National Minimum Wage (NMW) legislation which seeks to protect workers against the most egregious employers. We do not condone behaviour that intentionally seeks to avoid payment of the minimum wage and our response seeks to address improvements that can be made to NMW Regulations that enable the majority of employers, who strive to be good employers, to provide fair and decent work and working conditions that comply with legislation that is written to fit within modern pay operations and practices of the 21st Century.


Payroll professionals together with their software developers play an instrumental role in ensuring good levels of employer compliance with NMW Regulations and are the first to recognise the importance of well-written legislation that represents modern working practices.


We are hopeful that this consultation marks the beginning of ongoing conversation as to how the NMW Regulations can be updated to achieve this essential aspiration.


Key Findings from the CIPP survey

All regular payment cycles should be allowed within the definition of salaried hours work to bring the operation of NMW into line with other pay calculations e.g. PAYE income tax, Class 1 National Insurance Contributions and Automatic enrolment. This would benefit:


  • Workers within sectors who could then benefit from equalised payments made throughout the year and not be subject to hardship caused by seasonal ‘peaks and troughs’ of demand that affect the availability of working hours,

  • Employers whose compliance would increase. Many employers are unaware of this divergence between NMW regulations and other pay/employment tax operation,

  • The government in its work to modernise the work place and enable employers with salaried workers to fully engage with flexible working in all its variations.

Overtime, pay premia and allowances should be more widely included as acceptable payments for NMW and thus should be allowed within annual salary calculations.


The calculation year should be set at the employer’s discretion.


Salary sacrifice should be allowed for all employees where they have free choice to enter in to such agreements. If not to bring pay below minimum wage then at least to allow non NMW pay to be counted first. We recognise that this poses further questions as to whether to broaden the range of benefits in kind (BIKs) that can be included within minimum wage calculations.

Comprehensive and consistent guidance also aids employer compliance. A failure by the employer to comply is also a failure of state to provide. Greater use should be made of case studies to demonstrate compliant and non-compliant employer behaviour.
There are a number of other restrictions found within NMW regulations that are not fit for purpose in the 21st Century and further consultation needs to explore these fully – the following short list is illustrative but not exhaustive:

  • TOIL (Time off in Lieu),

  • Living accommodation rules – particularly the exclusion list for socially aware landlords,

  • Voluntary deductions.


Our full response to the consultation is available on our website in the ‘Policy hub’ which is under the ‘My CIPP’ tab.