GLA to revoke the licenses
GLA to revoke the licenses of labour providers operating non-compliant travel and subsistence schemes
Staffline, a leading provider of recruitment and outsourced HR services to industry, notes that with effect from today, as announced in November, the Gangmasters Licensing Authority (GLA) will normally revoke the licenses of any licence holders using salary sacrifice schemes which breach the following licensing standards:
the requirement to pay national minimum wage
the prohibition of work-finding fees and
the requirement to accurately calculate and pay tax and National Insurance.
In respect of these, the GLA has issued guidance that
expenses paid to workers do not count towards wages
compulsory administration fees levied on workers in relation to travel schemes are non-compliant in the absence of the provision of additional services and
labour providers are required to provide evidence that tax free expenses have actually been incurred by workers and providers can not apply HMRC dispensations granted to other license holders or employers.
Where non compliance is proven, in addition to action from the GLA, HMRC will take action to seek arrears of tax, national insurance and national minimum wage. Penalties and interest will also be sought where appropriate.
Staffline estimates that the overall cost to the Treasury of the continued use of this loophole, by both regulated and non-regulated sectors, is approximately 0.5bn this latest development from the GLA will only go some way to address the regulated sector.
The GLA has developed its stance as a response to the increasingly prevalent use of salary sacrifice schemes, where workers are encouraged to sacrifice a proportion of their wages in relation to expenses such as travel and subsistence costs, the aim being to reduce the amount of income tax and national insurance contributions payable by both workers and employers. The GLA has recently seen cases where minimum wage workers have had over 50% of their pay attributed to expenses, leaving their actual salary and the taxable amount as low as 97 per week. This reduction in an employee's national insurance contributions can leave employees unable to access contributory tax benefits, such as pensions, Jobseeker's Allowance and Employment and Support Allowance if their contributions in the years preceding a claim are insufficient.
Commenting, Andy Hogarth, Stafflines Chairman and Chief Executive, said:
We welcome todays announcement from the GLA, which further highlights the misuse of salary sacrifice schemes to undercut those not using the schemes and is an encouraging step towards ensuring workers receive the wages and benefits that they are due.