Well, according to a recent Employment Appeals Tribunal (EAT), yes, they should.
In this latest case, a taxi driver in Watford was employed by a firm, which dictated that as part of his conditions of employment he was required to provide a vehicle and uniform, both of which were rented from a company associated with his employer.
In the case of Augustine v Data Cars Ltd, Mr Augustine was employed as a taxi driver by Data Cars but, at the end of his employment, he brought a variety of claims to the employment tribunal, including that he had not been paid the NMW.
When making remuneration calculations, there are certain allowances and expenses which should also be taken into account.
Mr Augustine argued that the cost of the car rental and the purchase of the uniform should be deducted from his total remuneration.
The initial employment tribunal disagreed, concluding that the payments did not need to be considered for the purposes of calculating NMW, on the basis that both were optional and not a condition of employment.
Mr Augustine successfully appealed, , with the EAT pointing out that the correct test was whether the expenditure was incurred “in connection with” the employment and that both the rental payments and uniform costs satisfied that test.
This case highlights the complexities involved with calculating pay for NMW purposes and the potential consequences of making incorrect calculations.
Employers risk large penalties and being ‘named and shamed’ publicly by HMRC, if they fall foul of the NMW regulations, even if the mistakes may have been made quite innocently.
Many employers are caught out because of their uniform policies. NMW regulations 12 and 13 provide that any deductions made by an employer for the cost of uniform provided or for the cost of uniform to be purchased (whether from the employer directly, a third party generally or by the worker directly) does not reduce worker pay below the minimum wage in the relevant pay period.
The same principle also applies to tools which workers are required to provide or that they are provided with for the purposes of their work.
It does not matter that the uniform or tool can also be used for the worker’s benefit. What matters is that wearing the item or having the tool is a requirement of their employment.
A common issue, as in this case, is that many employers do not appreciate that unbranded items of clothing, which are required to be worn at work (for example, white t-shirt, black trousers or flat black shoes), are also considered to be ‘uniform’ by HMRC when assessing whether NMW has been complied with.
Remember, the National Living Wage increases to £9.50 from £8.91, while the National Minimum Wage for 21- and 22-year-olds rises to £9.18 from £8.36 from next April.
How can George Hay help?
This kind of area can be a minefield for employers, and so if you are ever in doubt we would urge you to seek advice and, where appropriate, specialist HR advice.
At GH Payscheme, our team of professional payroll advisers can help you to outsource your payroll function in its entirety. In doing so, we can ensure that the correct deductions are made, and that your employees are always paid the correct amount, on time.
Take the first step to solving your payroll struggles, by contacting us today.