The government has backed down in a row with businesses over the minimum wage.

Businesses that inadvertently push employees below the minimum wage by offering voluntary savings and benefit schemes to staff will no longer be fined.

>See also: Tory minimum wage pledge ‘not realistic’ for businesses, says IoD

The Department for Business, Energy & Industrial Strategy (BEIS) said that companies offering salary sacrifice schemes – where employees exchange part of their pay in return for benefits such as childcare vouchers or other products – technically pushing employees below the minimum wage, would no longer face financial penalties.

Business minister Kelly Tolhurst said: “We want to make it as easy as possible for employers, especially small businesses and those trying to do right by their staff, to comply with National Minimum Wage rules, which is why we’re reforming regulations.”

>See also: Protecting employees from overworking and minimum wage underpayment

Previously, HMRC pursued supermarket Iceland for a tax bill of over £20m after it allowed staff to voluntarily join its Christmas Club savings scheme, which pushed some pay below the minimum wage.

The business department also said it would relaunch its “naming and shaming” of employers who breach minimum wage rules. However, only those with wage arrears of more than £500 face being publicly named. The previous threshold was £100.

Businesses that underpay by less than £100 will have the chance to correct their mistakes without being named, but will still have to pay back workers and could face fines of up to 200 per cent of the arrears.

The government also announced more support for small business over the minimum wage, helping them get best practice right from the start, with onsite visits to start-ups to explain the minimum wage to them.

From April the minimum wage for those aged 25 and over will rise to £8.72 an hour, up from £8.21.

Further reading

Minimum wage protection should be extended to the self-employed