Magazine |
Gangmasters to revoke licences of those who abuse system

New legislation has come into force which allows the Gangmasters Licensing Authority to revoke licences of any employer found to be abusing salary sacrifice schemes. The scheme closes a loophole in the law which has cost the Treasury an estimated £0.5billion.

Payroll expert Kate Upcraft welcomed the move and told Payroll World: ‘It is essential that people who exploit vulnerable workers are caught and that workers are protected by law from employers who abuse their positions. It is also important that honest, hard-working people who use the scheme appropriately do not suffer as a result of those who do not.’

The legislation was introduced to prohibit employers from using the schemes to avoid paying employees the national minimum wage. The GLA’s rules are clear; employers who inaccurately calculate pay and National Insurance and who fail to pay the national minimum wage will have their licences revoked. In addition to the GLA revoking their licences HM Revenue & Customs will also take action and obtain their arrears of tax and National Insurance and the national minimum wage.

The GLA introduced the legislation because of increasing abuse of the system. It had seen cases where minimum wage workers would have over 50% of their pay attributed to expenses. Their salary amounted to little more than £97 per week.

Many employees are unaware that if National Insurance Contributions in the preceding year are insufficient then employees may not be entitled to contributory tax benefits such as jobseekers allowance, pensions or employment and support allowance.

01/03/2010