Under provisions within the National Minimum Wage Regulations 2015 employees and workers are entitled to be paid basic minimum salary which as from 1st April 2021 is :-
Age 23 or over : £8.91
Age 21 to 22: £ 8.36
Age 18 to 20: £ 6.56
Age 16 to 17: £ 4.62
Apprentice rate: £ 4.30
In the recent Autumn budget, the Chancellor of the Exchequer announced that from 1st April 2022 the above figures will increase to :-
National Living Wage for over-23s: From £8.91 to £9.50 an hour
National Minimum Wage for those aged 21-22: From £8.36 to £9.18
National Minimum Wage for 18 to 20-year-olds: From £6.56 to £6.83
National Minimum Wage for under-18s: From £4.62 to £4.81
Apprentice rate from £4.30 to £4.81
Employment Tribunal
The Employment Appeal Tribunal (EAT) in the case of Augustine v Data Cars Ltd 2021 have confirmed that the Employer needs to prove that they have met their responsibility to pay the correct NMW rate as where a worker or employee alleges that they have been paid less than the NMW entitlement it will be presumed that the assertion is correct unless the contrary can be established by the Employer.
Above places a greater obligation on part of the Employer to get the calculations right in particular to wage deductions related to expenses as if they get it wrong there is the potential that the Employer could be named and shamed by the Government (1).
Deductions by way of expenses made by the Employer from the employee’s salary is a complex area where the HMRC manual explains that any deduction or payment from the worker in respect of expenses incurred in connection with their employment will always reduce national minimum wage pay (2) and the manual gives an example of a calculation, namely “ A time worker is paid £100 plus £10 to reimburse his week’s expenses. The worker’s total remuneration for that pay reference period is therefore £110. However, any payment in respect of expenses incurred in connection with the employment, in this case £10, is subsequently reduced from the calculation of national minimum wage pay. This will then result in the worker’s national minimum wage pay being £100 (£110 minus £10)” – (3)
HMRC
The HRMC manual suggests that the above provision may not apply to purchases or expenses incurred by choice, rather than as a requirement of work, and gives an example “ Where a uniform is not required or where a worker freely chooses to pay for additional items of uniform (over and above the dress requirements of the employment), any payment to the employer or a third party will not reduce national minimum wage pay” (4)
However, EAT in the case of Augustine v Data Cars Ltd 2021 has complicated matters by deciding a different outcome.
In the above case Mr Augustine (A) worked for Data Cars Ltd as a mini cab driver renting a mini cab from a company associated with Data Cars Ltd and purchasing Data Cars uniform.
(A) alleged that he was an employee of Data Cars therefore entitled to the NMW and the ET agreed thus there was then an issue related to NMW calculations if certain payments made by (A) fell within regulations 12 and 13 of 2015 Regulations to be deducted, including payments in for the vehicle and uniform.
The ET decided that the cost of car hire and the purchase of the uniform were both optional expenses, as (A) could use his own car which he initially had did before taking up hire of the vehicle and the uniform was not obligatory. Therefore, these costs did not need to be taken into account when calculating the NMW thus fell out of the regulations 12 and 13 of 2015 Regulations. The decision was appealed.
On appeal, the EAT held that both the cost of the car hire and the uniform were deductions. The EAT held that the test is whether the expenditure is “in connection with employment”. They found that the expenditure does not have to be a requirement of employment and it does not have to be necessarily incurred nor wholly or exclusively incurred in connection with the employment. It was therefore irrelevant that (A) could use his own car or that the uniform was not obligatory, he hired the car and wore the uniform in connection with his employment.
Please note that this article is for information purposes only and should not be relied upon as being authoritative on the matter however further guidance on the matter can be provided by contacting our HR/legal advice-line on 01455 852028.
( Source 1 )
( Source 2 )
( Source 3 )
( Source 4 )
