Employment Law Cases
NMW and expenses
Augustine v Data Cars Ltd
Payments made by a driver to rent his vehicle and uniform should have been taken into account when working out whether he had been paid the National Minimum Wage (NMW).
Mr Augustine worked as a taxi driver for Data Cars. He had to provide a vehicle and therefore rented a car from a company associated with Data Cars. He also chose to rent a uniform from Data Cars as a uniform was required if he wanted to work as a designated ‘gold driver’. At the end of his employment, he brought tribunal claims arguing he was an employee or worker of Data Cars and that he was therefore entitled to the NMW. The tribunal agreed that he was an employee. There was then a dispute as to whether, for the purposes of the NMW calculation, certain payments made by Mr Augustine should be deducted for the purposes of calculating if he had been paid the NMW. The tribunal held that the payments for vehicle rental and uniform fell outside of the National Minimum Wage Regulations 2015, while other payments (for insurance, valeting, access to an app and fuel costs) should be considered valid employment expenses and therefore deducted for NMW purposes. Mr Augustine appealed.
The appeal was allowed.
Both the cost of hiring the car and the cost of purchasing the uniform were deductions for the purposes of calculating Mr Augustine’s 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 - regardless of the fact that it was not compulsory for the uniform or car to be rented. Payments do not have to be a requirement or necessity of employment to qualify as a deduction. Here the payments were both made in connection with Mr Augustine’s employment so the EAT held that they were both deductible for calculating whether he had received the NMW.
Link to judgment: https://www.bailii.org/uk/cases/UKEAT/2021/2020-000383.html
Employers who require employees to have a vehicle may want to impose conditions on this – for instance that it is their own car for which no rental or hire purchase payments are made, to avoid such payments being taken into account for minimum wage purposes.
Calculating pay for NMW purposes can be tricky and it was perhaps surprising that there is little case law in this area. Getting it wrong can lead to reputational damage, especially if the offending employer (even if its mistake is inadvertent) finds itself ‘named and shamed’ under the government scheme.