Living Wage & National Minimum Wage in your labour supply chains

04 April 2023      Julia Ascott, Employment Taxes Specialist

HMRC has published ‘promotional material’ setting out the risks within a labour supply chain, of not paying the correct wage because there could be a number of parties between the end client (i.e. the university) and the worker.

This promotional material sets out the common causes of underpayments, examples to help you identify areas of risk and how to mitigate those risks, the latter stating:

“These examples are guidelines to help you avoid underpaying your workers:

  • check workers are being paid their contractual rate and that it complies with the National Minimum wage or the National Living Wage
  • check that if any deductions are being made that they do not take workers’ pay below the minimum wage rates
  • review the checklist for employersfor other common causes of underpayments
  • conduct due diligence to ensure you are receiving the correct working time information to pay workers the appropriate amount, as workers need to be paid for their actual working time, not what they are scheduled to work - recruitment agencies often receive shift data and/or rota data for workers, which may not have all working time recorded (for example having to arrive earlier, undertaking security checks at the end of their shift)
  • make sure that workers know who to approach if they want to raise or try and rectify an issue with their pay - whoever employs the worker, whether it’s the recruitment agency or umbrella company, there needs to be a clear communication channel in place”

Universities using agencies, umbrella companies and any other suppliers that will provide labour as part of their services should review these risks to ensure that there will be no reputational impact should a party in the chain be underpaying its staff. We understand that many university procurement teams require providers to confirm they pay their staff above NMW or NLW, or Real Living Wage (where universities are accredited).

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