In this article, Employment Partner Paul Burton looks at a recent case where an employee claimed to be underpaid.
Paul discusses deductions in wage, considering what constitutes one and how it effects the NMW.
What is the National Minimum Wage?
The National Minimum Wage is currently as follows:
- NLW* (age 23 and over) - £8.91
- Age 21 and 22 - £8.36
- Age 18 to 20 - £6.56
- Age 16 and 17 - £4.62
- Apprentice rate - £4.30
*From April, the National Living Wage (NLW) will rise to £9.50 an hour.
When can a company pay less than the National Minimum Wage?
In Augustine v Data Cars Ltd the claimant worked as a driver for the respondent from February to September 2016.
He made a claim to the employment tribunal that he had been underpaid the national minimum wage (NMW), as well as claiming for holiday pay and wrongful dismissal.
Employment Status and the NMW
There was a dispute over his employment status, but at a preliminary hearing the employment tribunal found Mr Augustine to be an employee.
This led to arguments over the NMW claim.
The employment tribunal held that vehicle
What constitutes a deduction in wage?
Employment Appeal Tribunal (EAT) held that an employment tribunal was wrong to decide that car and uniform rental payments were not to be treated as reductions for the purposes of the NMW.
They were definitely expenses “in connection with” the employment for the purposes of regulation 13 of the NMW Regulations 2015.
This was despite the fact the employment tribunal had found Mr Augustine was not obliged to rent the car or uniform, it was his own choice.
NMW and expenses
The EAT held that this choice was irrelevant, the simple fact the expenses were connected to the employment was enough.
By treating these payments as deductions Mr Augustine received less than the NMW and this part of his claim succeeded.
An Employment Solicitor’s View
Paul Burton says: “Many employers and employees think the calculation of the NMW is simple, just look at the hourly rate applicable according to age and then make sure this is paid.
However, this case demonstrates the calculation is often not that simple. Even tribunals get it wrong!
I have recently had a number of cases in which issues with NMW were the cause of the dispute.
The rules around what can be deducted, the reference periods, hours worked and the ways employees are paid are quite complicated.
Employers should seek advice if they have any doubts as to whether or not they are paying at least the appropriate NMW rate.”
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