National Minimum Wage and the social housing sector

RSM looks at HMRC’s National Minimum Wage (NMW) enforcement activity in the social housing sector and the risk areas that organisations should be aware of.

It was announced in the Autumn Statement that the National Living Wage is increasing to £11.44 from 1 April 2024, and this rate now includes workers aged 21 and over. These increases mark the largest uplift in NMW rates to date and coupled with the increased costs of national insurance, employer pension contributions and increasing pay differentials between grades, this uplift - along with the current economic climate - comes at a challenging time for the social housing sector.

HMRC NMW activity in the social housing sector

A recent strategy paper, published by the Director of Labour Market Enforcement, makes multiple references to the recent successes of the HMRC NMW team in their targeted approach to enforcing compliance.

Since the start of this year, RSM is aware that a number of employers operating in the sector have received ‘nudge letters’ from HMRC highlighting some common NMW risk areas. Some of the letters also confirm that full NMW compliance checks will be opened over the coming months.

NMW risk areas for the social housing sector

Based on our recent experience of supporting employers in the social housing sector, these are some of the key risk areas you may wish to consider.

Working time

It is important that employers capture and can demonstrate all working time to prove that at least NMW has been paid for all time worked. 

Areas such as employees clocking in before the start/after the end of their working day, not taking their full break entitlement, and/or time spent training can all lead to uncaptured working time.

For those with field-based roles, this can be particularly relevant where workers are required to stay and complete paperwork, handover before the start/at the end of their working day, or even make a personal choice to continue working past the end of their working day.

For workers based in an office, it can also be important to ensure that an employer has an understanding of the number of hours actually being worked as this can sometimes be difficult to track, for example where employees car share, arrive early due to public transport or work extra hours to complete their duties.

Travel

It is important for employers to consider a worker’s travel time and whether this should be included as working time. Where workers are required to travel as part of their role, for example home visits, there is a risk that travel time is not accurately captured or considered when reviewing NMW compliance. Due to the nature of some workers’ roles, travel time within the social housing sector has proven to be a high-risk area, so careful consideration is needed to mitigate this potential risk.

Varying working practices

Given the size and number of different teams and departments within social housing organisations, there is a risk that working practices may vary across different teams/departments. Whilst policies and procedures may be consistent and fully compliant with NMW, these policies may not be commercially feasible in every department and so variations are adopted across different locations.

Dress code

Where there is a dress code or uniform requirement, including PPE, particularly where the social housing provider has care or maintenance workers, the cost of this can reduce pay for the purposes of NMW if employees have to purchase items.

Deductions from pay

Where any deductions are made from an employee’s wages, there is a risk that these can reduce pay for the purposes of NMW and should be carefully monitored.

How RSM can help?

RSM’s specialist team supports clients through both self-review exercises and HMRC NMW audits, which can be lengthy due to the technical legislation. The team has a wide range of experience and has worked alongside clients to strengthen their overall processes around NMW compliance. 

If you require any support or would like to discuss NMW in more detail, please do not hesitate to contact Dale Charnock (dale.charnock@rsmuk.com).