One of my clients for whom I do payroll pays one staff member for "so many hours at £6.50/hr". I alerted the client to new min wage rise and the need to increase the salary but was advised that his was only what the contract says. The reality is that the wage rate would be higher (£9, £15 whatever) but it is lower because they get perks.
On further questionning one of the perks is the provision of rent-free occupation of the cottage. I should add the two employees, Mr and Mrs, are gardeners, in-house cooks, domestic help. At the meeting all I could think of was that PAYE is being avoided by them having a lower salary AND HMRC would expect Mr and Mrs to pay the rent to my client the rich old lady.
But is that the exact point of a salary sacrifice. (light bulb moment!!). My client said this was all drafted and discussed by an employment lawyer. But I wonder if they have sufficient skill of PAYE and benefits? Or I am being the thicky one and not realising it's a clear salary sacrifice.
I have read various EIM pages. The need for staff to "opt back" into the higher salary equivalent etc. Just wondering on readers thoughts on this please?
All I know is that at present the employment contract/summary which I have seen shows an hourly rate below NMW. Any issues or things to offer to client?