Salary sacrifice and national minimum wage

By Tolley in association with Robert Woodward
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The following Employment Tax guidance note by Tolley in association with Robert Woodward provides comprehensive and up to date tax information covering:

  • Salary sacrifice and national minimum wage
  • Introduction and background
  • Salary sacrifice
  • Benefits made available to all

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 by the NMW / NLW is available on the GOV.UK website .

Despite the NMW / NLW

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