Calculating the National Minimum Wage


30 November 2021

In a recent decision, the Employment Appeal Tribunal (EAT) has ruled on whether a taxi driver’s care and uniform rental payments should be deducted for National Minimum Wage (NMW) purposes.

Augustine v Data Cars Ltd, EA-2020-000383

Facts

The claimant was employed as a taxi driver. He rented a vehicle from a company associated with his employer and also rented a uniform, which was optional but enabled him to carry out premium driving jobs.

Following the termination of his employment, the claimant brought a number of claims in the employment tribunal, including a claim that he had not been paid the NMW. A tribunal decided that the car and uniform payments were not deductible for the purposes of calculating his entitlement to the NMW. This was on the basis that he was not obliged to rent the car (he had the option of using his own vehicle) and the uniform was also not required in order for him to work. The claimant appealed.

EAT decision

The EAT has allowed the claimant’s appeal, finding that both the car and uniform rental payments were deductible amounts for calculating NMW. The tribunal had applied the wrong test. The payments did not have to be a requirement of the employment but only ‘in connection with the employment’. Even though the claimant could have opted to provide his own car, and was not required to wear the uniform, both payments were incurred in connection with his employment and were deductible for the purposes of calculating NMW entitlement.

Consequences of this decision

This decision serves as a reminder that there are a broad range of deductions that must be taken into account for the purposes of calculating a worker’s hourly pay. It includes deductions made in respect of a worker’s expenditure in connection with their employment, such as purchasing tools or equipment or the cleaning or purchasing of uniforms, even where such items are not a requirement. The payment does not have to be necessarily incurred, nor ‘wholly or exclusively’ incurred for the purposes of the employment. The worker must receive at least the NMW after any such deductions and payments have been taken into account.

These articles are from the November 2021 issue of Employment and Immigration Law Update, our monthly newsletter for HR professionals. To download the latest issue, please visit the newsletter section of our website. For further information please contact a member of Birketts' Employment Team.

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at November 2021.

Author

Liz Stevens

Professional Support Lawyer

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