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REC backs travel and subsistence stance

Wednesday 28th July 2010

The Government yesterday confirmed its position on how travel and subsistence schemes should interact with the National Minimum Wage.

The Recruitment and Employment Confederation has, for many years, taken forward members' concerns on this issue and called for clarity from HMRC.

The Government announcement makes it clear that any payments made for such expenses will have to be in addition to the minimum wage.

REC head of public policy Anne Fairweather said: "Moves to create a level playing field at the lower end of the market are welcomed.

"The use of travel and subsistence schemes to substantially reduce the cost of supply of workers on minimum wage had created distortions which were not sustainable.

"We are pleased that the Government has finally taken action on this issue after two years of campaigning by the REC."

The changes will work in the following way:

* The National Minimum Wage Regulations include provisions which set out how a worker's pay is calculated and determine whether or not the worker is receiving at least National Minimum Wage (NMW);
* The current Regulations list certain payments that are made by the employer to a worker which are ignored when calculating the worker's pay, ie) the employer is not allowed to use these payments to meet the NMW;
* The proposed amendment to the regulations will mean that the payments made by an employer to a worker for travel and subsistence will be added to this list. As a result, employers will need to ensure that they pay their workers the NMW in addition to the payments under the travel and subsistence schemes.

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