Response to HM Treasury consultation on National Minimum Wage workers: Travel and subsistence expenses schemes

Published May 2010

The Commission welcomes the action proposed to address the issue of travel and subsistence schemes and their impact on workers operating at or around the National Minimum Wage (NMW). Evidence collected as part of our recent formal inquiry into the meat and poultry processing sector suggests that such schemes are not currently run consistently or transparently. We are concerned that the benefits to be gained from the running of schemes are skewed towards employment businesses rather than workers, and that any small increase in pay for workers enrolled on schemes is outweighed by the potential to lose out on contributory benefits. We have divided our consultation response into two sections:

  • The evidence base used to inform the proposals outlined in the consultation
  • Findings from our formal inquiry into the meat and poultry processing sector that are relevant to the proposals outlined in the consultation

The key points we make about the evidence base are:

  • A thorough equality impact assessment is necessary to provide important evidence on the impact of the proposed changes on different groups of workers. It could result in extra evidence in support of the proposals.
  • Further evidence should be gathered on the impact that the schemes (and their proposed cessation) have on workers’ contributory benefits, particularly the second state pension.
  • The EIA should also consider levels of awareness and choice regarding the schemes amongst agency workers paid at or around the NMW, including consideration of proactive claim rates of benefits affected by schemes, such as Working Tax Credits or Housing Benefit.

The key points we make about our inquiry findings are:

  • We found a lack of understanding and informed choice about the impact of travel and subsistence salary sacrifice schemes on access to earnings related contributory benefits; particularly amongst vulnerable and migrant workers.
  • We were also told about the adverse impact of travel and subsistence salary sacrifice schemes on fair competition between agencies. 

Download the full consultation response (word)

 

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