3 things you should know about the Taylor Review

There’s no doubt that the Taylor review will impact on how we all do business.  Our people make the difference between a positive shopper experience and a poor one.  Protecting your peoples’ rights are also essential to looking after their wellbeing.  So, it’s important to understand the recent regulatory changes and Government enforcement activity. 

Now is the time to check your business is fit for the new world.   

To help navigate this complex landscape there are three main areas of focus for retailers: 

1. National Minimum Wage (NMW) and National Living Wage (NLW)

Her Majesty’s Revenue and Customs (HMRC) are currently doing a large number of NMW audits in retail. Given the complexities of complying with NMW these reviews inevitably find breaches, even if they are inadvertent. For example, workers having to purchase items of clothing for their role or starting/finishing their shift a few minutes earlier or later than scheduled. Even small adjustments can result in breaches.  Liabilities can be costly when the number of workers involved, six year look back period and 200% penalties are considered.

Given that for most retailers it’s a question of when they have a NMW audit, not if, retailers should prepare fully by undertaking a proactive review. Also given the strong likelihood of upcoming changes to the NMW regulations, take the time now to understand your potential exposure to existing regulations and as they evolve. 

2. Holiday pay

Recent case law has made it clear that while on holiday workers are entitled to their ‘normal remuneration’ inclusive of regular additional payments.  This has been confirmed in recent Government guidance. Legislation from April 2020 means employers must look at workers’ average earnings across a 52 week reference period (rather than 12 weeks at present) to calculate the holiday pay due. The Government plans to enforce holiday pay compliance (likely to be in a similar way as NMW) from April 2021.  In our experience, some employers still only pay basic pay or basic contractual hours for periods of holiday and therefore are not paying workers what they are due. Even where employers have systems in place they will inevitably need to be further changes made to ensure compliance from April 2020 and avoid any costs associated with a 6 year look back for claims.

To avoid non-compliance (and associated actions/penalties when enforcement comes in) you should review your holiday pay processes, policies and pay elements. Then implement robust processes in line with the new legislation.

3. Off-payroll workers

From April 2020 all but the smallest employers will now have to assess the employment status for any contractors providing services via a Personal Service Company (PSC). Even if the employers engage with their contractors via an agency. Where necessary they will have to put the PSC on their payroll and withhold PAYE and NIC.  The current Government consultation indicates the rules for the private sector will mirror what has already happened for contractors working via PSCs in the public sector. Our experience of helping public sector employers showed there are a number of departments that need to be involved in these changes from HR, tax, payroll, procurement, etc.

Supply chain compliance has always been key for retail companies. It’s important now that you use the time now to review your supply chain to check instances where a PSC is being used either directly or via an intermediary. Once all PSCs have been identified, agree an action plan on how these changes will be managed across all departments and the cost implications, especially where existing client contracts are in place.  

We know that these regulatory changes and Government enforcement activity can feel like a minefield.  It’s hard to know where to focus.  The key to success is ensuring you are both compliant now and that your systems and processes are agile enough to stay fit for the future.  

  By John Harding // Partner, PwC


The Good WORK PLAn Roundtable  | 03 APR 19, London

To help navigate this new plan BRC, in association with PwC, will host an exclusive to retailers roundtable.

At this session we will discuss what immediate legislative changes set out in the Good Work Plan mean for retail employers; how to engage with a new enforcement landscape and share practical steps for retailers ahead of future regulatory change bearing in mind the additional cost that this is likely to bring.

Register Here >

Places are limited and available on a first come, first serve basis.