UK: National Minimum Wage – Vehicle and Uniform Rental Costs
Payments made by a taxi driver to rent his car and uniform should have been taken into account when deciding whether he had been paid the National Minimum Wage (“NMW”), says the EAT.
Mr Augustine was employed by Data Cars Ltd as a taxi driver. He had to provide a vehicle for work by either using his own vehicle (if he had one) or renting a vehicle. He rented a vehicle from a company associated with Data Cars Ltd. He also chose to rent a uniform from Data Cars Ltd so that he could work as a designated “gold driver”. He was not obliged to rent the uniform, but it was required to do gold level work, which was optional.
After Mr Augustine’s employment ended, he brought various employment tribunal claims, including that he was an employee or worker of Data Cars and had not been paid the NMW. The employment tribunal decided that he was an employee. On the question of whether he had been paid the NMW, a tribunal found that while some payments including fuel costs, valeting and insurance payments, should be deducted from Mr Augustine’s salary for the purposes of deciding whether he had been paid the NMW, deductions were not allowable for the car and uniform rental payments. This was because Mr Augustine had the option of using his own vehicle and rental of the uniform was also optional as he did not have to undertake gold level work. Mr Augustine appealed.
The EAT allowed Mr Augustine’s appeal. Both the car hire costs and the cost of renting the uniform were deductions for the purposes of calculating whether Mr Augustine had been paid the NMW. A payment will be deductible for calculating the NMW if a payment is made by an individual ‘in connection with their employment’ and is not later reimbursed by the employer. It did not matter that it was not compulsory for the car or uniform to be rented. Payments do not have to be a requirement or necessity of employment to qualify as a deduction. In this case, the payments were both made by Mr Augustine in connection with his employment, so the EAT concluded that they were both deductible for calculating whether he had been paid the NMW.
Key Action Points for Human Resources and In-house Counsel
NMW calculations can be tricky. This case shows the importance of looking carefully at the rules and considering whether workers are being paid the NMW. Allowable deductions can reduce hourly rates below the minimum. Employers who get it wrong, even inadvertently, run the risk of claims from their workers and reputational damage. The government periodically publishes a list of businesses who have not complied with NMW law.