In Augustine V Data Cars Ltd the EAT held that an employment tribunal erred in not allowing a taxi driver's uniform and car rental payments to be deducted when calculating whether he had been paid the national minimum wage (NMW).
Mr Augustine worked as a taxi driver for Data Cars Ltd and as part of his employment he required a car, either his own or a rental car. He rented a vehicle from a business associated with Data Cars Ltd. He also purchased a uniform from Data Cars Ltd so that he could work as a designated 'gold driver' as he could only carry out the 'gold level' work if he had the uniform. His employer argued that being a 'gold driver' was optional and as such should not be treated as an expense in connection with his employment. Mr Augustine brought a number of complaints following the end of his employment, including a claim that he had not been paid the NMW, once factoring in his expenses.
For NMW calculations deductions and payments are to be treated as reductions if the worker's expenditure is in connection with their employment and not reimbursed by the employer.
When considering the vehicle rental payments, the EAT held that the relevant legal test was whether the expenditure was in connection with the employment, "the fact the claimant could have met his obligation by using his own vehicle, if he had one, is not relevant to the application of that test." Importantly, the EAT held that the expenditure did not have to be a requirement of the employment. It neither had to be necessarily incurred, nor wholly or exclusively incurred. The tribunal had erred in not applying that test. As such, the rental payments should be deducted when calculating remuneration for NMW purposes.
Mr Augustine similarly argued that the uniform was a requirement for carrying out 'gold driver' level work, it bore the Company's logo and he had no other use for the uniform. The EAT held that payment for the uniform was in connection with his employment and should be deducted for the purposes of the NMW calculation as a designated "gold driver" he was required to wear the uniform and plainly wore it in connection with his employment which is why he paid for it.
What does this mean for employers?
Calculating pay for NMW purposes is a tricky area of law and understanding the complexities of the Regulations is sometimes difficult.to navigate. There is little case law on this issue and the HMRC guidance seems to be at odds with this case. Employers should reassess their company policies and consider whether their workers can be asked to rent or purchase uniform or equipment in connection with their employment and not necessarily as a requirement of the employment, which will feed into pay calculations for NMW purposes. It may be appropriate to impose additional restrictions, conditions or approvals for expenditure to reduce the risk of expenses being incurred at the outset.