The Employment Appeal Tribunal recently ruled that a taxi driver’s car and uniform rental costs should have been taken into account when calculating whether he had been paid the national minimum wage (NMW).

How Is NMW calculated?

When calculating hourly pay it is important to divide the total remuneration in the relevant pay reference period by the total number of hours worked.

Rental costs

In the case of Augustine v Data Cars Ltd, Mr Augustine was employed as a taxi driver by Data Cars. As part of his employment, he was required 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 it was required if he wanted to work as a designated ‘gold driver.’ But at the end of his employment, he brought a variety of claims to the employment tribunal, including that he had not been paid the NMW.

When calculating total renumeration, there are certain payments which should be deducted including expenses or allowances. In this instance, Mr Augustine argued the cost of the car rental and the purchase of the uniform should be deducted from his total remuneration.

The employment tribunal disagreed, concluding the payments did not need to be considered for the purposes of calculating NMW, on the basis that both payments were optional and not a condition of employment.

Mr Augustine successfully appealed, with both payments found to be deductions for the purposes of calculating his NMW.

What are the implications for Watford employers?

This case highlights the complexities involved with calculating pay for NMW purposes and the potential pitfalls of getting your calculations wrong.

Employers who are making incorrect calculations are being ‘named and shamed’ by the Government in their ‘naming scheme’ as falling foul of the NMW regulations. This is the case even if the mistakes have been made quite innocently.

Being named can have consequences for an employer’s reputation as well as their ability to bid for public contracts.