The Employment Appeal Tribunal has handed down Judgment in the case of Augustine v Data Cars Ltd [2021] EA-2020-000383-A, on the issues as to what constitutes National Minimum Wage reductions.
National Minimum Wage Reductions
Under Regulation 13 of the The National Minimum Wage Regulations 2015, any expenses incurred by a worker or deductions made from that worker's pay are treated as reductions for the purposes of calculating whether the worker has been paid the National Minimum Wage, where those expenses / deductions are incurred in connection with the workers employment (hereafter referred to as 'National Minimum Wage reductions').
Specifically, Regulation 13 states in relation to National Minimum Wage reductions: "The following deductions and payments are to be treated as reductions if the deduction or payment is paid by or due from the worker in the pay reference period—
(a) deductions made by the employer, or payments paid by or due from the worker to the employer, as respects the worker’s expenditure in connection with the employment;
(b) payments to any person (other than the employer) on account of the worker’s expenditure in connection with the employment unless the expenditure is met, or intended to be met, by a payment paid to the worker by the employer."
But this raises the issue as to what expenses and deductions are deemed to be 'in connection with employment'. And that was the issue that was being addressed in the case of Augustine v Data Cars Ltd [2021].
Augustine v Data Cars Ltd [2021]
In the case of Augustine v. Data Cars Ltd [2021], Mr Augustine was a tax driver. He had the option of using his own car for that purpose, but chose instead to rent a car. He was also not required to use his employers uniform, but he chose to acquire one as he would only be allocated his employers more prestige work if he did so.
At first instance, the Employment Tribunal ruled that neither the expenses incurred in renting the vehicle nor the expenses incurred in acquiring the uniform constituted National Minimum Wage reductions.
In relation to the renting of the vehicle, the Tribunal held that Mr Augustine was under no obligation to rent a vehicle to perform his job. He could instead have used his own vehicle, or bought another vehicle. Accordingly, the Tribunal ruled that the car rental expenses were not incurred in the course of Mr Augustine's employment, and therefore were not something that should be treated as a reduction for the purposes of calculating whether Mr Augustine had been paid the National Minimum Wage
The Tribunal also held that the expenses incurred by Mr Augustine to acquire the uniform could also not be classified as National Minimum Wage reductions either. This was because the Tribunal ruled that Mr Augustine was under no obligation from his employer to acquire the unform.
Appeal To The EAT
Mr Augustine appealed the rulings relating to the rental car and the uniform to the EAT.
The EAT overturned the Tribunals rulings on both issues.
Firstly, the EAT ruled that the rental car expenses did constitute National Minimum Wage reductions. The EAT held that: "It did not, in fact, have to be a requirement of the employment. It neither had to be necessarily incurred, nor wholly or exclusively incurred. The test that Parliament has determined appropriate in the context of a national minimum wage calculation is whether the expenditure is in connection with the employment. The tribunal did not apply that test, but decided the matter on a different and irrelevant basis; and it erred in doing so."
The EAT added: "It appears to us that, had the tribunal applied the correct test on the facts found, it could only have concluded that this expenditure was incurred in connection with the employment, and we will accordingly allow ground 1 and substitute a decision to the effect that the vehicle rental expenditure was allowable as a deduction when calculating the national minimum wage under regulation 13."
Secondly, in holding that the uniform expenses were also National Minimum Wage reductions, the EAT ruled that: "The basis of the tribunal’s decision, that this item was not allowable.....was that wearing the uniform was optional and only needed if the claimant was doing a certain level of work. However, once again the claimant correctly submits that the test is one of connection with the employment."
The EAT added: "As a matter of fact....the claimant was designated a ‘gold driver’ and was required as such to wear the uniform; but in any event he plainly wore this uniform in connection with the employment and that was why he rented it. The tribunal once again has determined the matter on an erroneous basis and, had it correctly applied the law to the undisputed facts, it would have been bound to conclude that this expenditure fell within regulation 13(1)."
The EAT's reasoning behind determining that the uniform expenses were National Minimum Wage reductions is undoubtedly correct. The fact of the matter is that Mr Augustine would not have been able to perform some of his role (i.e. the prestige work) without a uniform, and he therefore effectively had no option but to acquire the uniform.
The ruling that all of the car rental expenses in this particular case constituted National Minimum Wage reductions was also sound. Nobody should be expected to use their own vehicle which has been bought for personal use as a taxi. Mileage accrued whilst used as a taxi would diminish the value of that vehicle, and the remuneration received as a taxi driver would not fully compensate for that. Accordingly, it was only right that the car rental expenses are treated as National Minimum Wage reductions in the circumstances of this case.
But what if in another case, the taxi driver had rented a far more expensive vehicle than the one Mr Augustine did - a Bentley for example. Should all of those expenses be treated as National Minimum Wage reductions, or should the question of what expenses are treated as reductions be subject to a reasonableness test?
The issue of whether the level of expenses incurred are reasonable was not explored in the Augustine case, as it was not disputed by the employer that the vehicle in question in that case was reasonable. However, undoubtedly the issue of reasonableness will crop up and need to be addressed in a future case down the line. It surely is only right that where the level of expenses incurred are excessive, that only those that are reasonable should be allowed in as National Minimum Wage reductions.
