Trade unions have welcomed a Government announcement of a law to take effect from 1 January 2011 that will stop payments made into travel and subsistence tax relief schemes from counting towards the national minimum wage (NMW).

An earlier consultation uncovered abuse of these schemes by unscrupulous employers who have used these arrangements to avoid liability to pay National Insurance contributions, says the TUC.

TUC general secretary Brendan Barber said: "This is welcome news. The minimum wage must provide a robust pay floor that supports vulnerable workers.

"In far too many cases travel and subsistence plans have been mis-sold to workers. Rogue employers have exploited these schemes to avoid paying National Insurance and workers have ended up losing out on pension and sick pay entitlements, maternity pay and tax credits.

"The TUC is in favour of taxation that is fair and vigorous in application. Employers and workers have a clear duty to pay their fair share to the Exchequer. In return, the Government's part of the contract is to deliver the high quality public services that we all need.'