Rental Payments for Uniform and Equipment should be deducted for the purposes of the National Minimum Wage

The EAT recently decided that  rental payments made by a taxi driver to hire his vehicle and uniform should be deducted when calculating whether he had been paid the national minimum wage (NMW) .

Both payments were “in connection with his employment”, as required under the National Minimum Wage Regulations 2015. The fact that the driver could have used his own vehicle, if he had one, in order to meet his employment obligations was not relevant to the application of the ‘connection with employment’ test. Similarly, the fact that he only needed a uniform if he wanted to do a certain level of work was also not a relevant consideration.

The employee was employed by DC Ltd as a taxi driver. To begin with he provided his own vehicle but after a few weeks he began renting a vehicle from a company associated with DC Ltd.

When his employment ended he brought a number of complaints to an employment tribunal, including that he had not been paid the NMW.

The tribunal decided that certain payments made by the employee fell to be deducted from his salary for NMW purposes. These included payments for fuel, insurance and cleaning his vehicle. However, in the tribunal’s view, the car rental payments were not deductible nor were payments made by the employee to hire a work uniform.

According to the tribunal the employee was not required to rent a vehicle from A Ltd or its associated company. He could have provided his own vehicle provided that it was less than five years old.  The employee was not obliged to rent a uniform he only needed a uniform if he wanted to do a certain type of work, which was entirely optional. The employee appealed to the Employment Appeal Tribunal, arguing that the rental payments for both his car and uniform should have been deductible for NMW purposes.

The EAT allowed the employee’s appeal.

In order to be deductible under the NMW Regulations, the relevant payments had to be ‘in connection with the employment’ and not reimbursed by the employer.

The payments did not have to be a requirement of the employment. They neither had to be necessarily incurred, nor wholly or exclusively incurred. This was the incorrect test.

The fact that the employee could have met his employment obligations by using his own vehicle, if he had one, was not relevant to the application of the test. Furthermore, the employee plainly wore his uniform in connection with his work and that was why he rented it. Had the tribunal applied the correct test on the facts found, it could only have concluded that both types of payment were incurred in connection with the employee’s employment and were therefore deductible when calculating the NMW.