New NMW Regulations

07 - 12 - 2010

Fiddling the National Minimum Wage. 

A Number of Umbrella companies and Agencies operating PAYE have apparently been rather creative with their personal definition of the National Minimum Wage (NMW). They were trying to reduce the cost of labour so that they could win tenders or other contracts unfairly – to the detriment of their individual workers of course.

Both the Department for Business, Innovation and Skills (BIS) and HMRC are aware that a number of travel schemes and umbrella business models are being marketed which claim to continue to provide savings for the employer and be compliant with the NMW from 1 January 2011. These include:

·       Paying subsistence expenses rather than travelling expenses;

·       Classifying workers as directors;

·       “Holiday Pay adjustments”; and

·       Under recording hours worked.

BIS and HMRC say that none of the schemes, including those listed above, would comply with the requirements of NMW legislation for workers paid at, or close to, the NMW. They have clearly been constructed with the express intention of operating contrary to the intention of Parliament and as such HMRC will identify businesses seeking to circumvent the NMW and take appropriate action.


Any umbrella or agency business flouting the new rules, introduced with effect ffrom1st January 2011, will risk paying arrears of tax, National Insurance, interest and penalties on the so called savings.


The current National Minimum wage for workers over the age of 21 is £5.93 per hour for every hour worked. If you have doubts about the rate you are being paid contact BIS, HMRC, or of course Contact Us.






Foremans LLP Umberlla
Foremans LLP