Burden of proof in national minimum wage claims
EAT ruling
In November 2021 the Employment Appeal Tribunal (EAT) handed down an important ruling regarding payment of, and deductions from, the national minimum wage (NMW).
The case in question was Augustine v Data Cars Ltd 2021 (see The next step ). Mr Augustine (A) was employed as a taxi driver by Data Cars Ltd (D).
Deductions made
A rented a car from D and also paid for insurance, fuel and cleaning costs. He also hired a staff uniform from D which enabled him to undertake additional jobs as a “gold driver”.
A paid D weekly fees of £160 for all of these expenses. He later alleged that, as a result of the deductions, he had not been paid the NMW . D disputed this so A took the matter to the tribunal.
Tribunal ruling
The tribunal found that the fees for insurance, fuel and cleaning costs were incurred “in connection with the employment” and should have been deducted by D when calculating NMW payments.
However, it further determined that the car hire and staff uniform were optionally incurred expenses. This was because A could have used his own vehicle for work purposes and wasn’t ever obliged to wear a staff uniform.
On this basis, the tribunal concluded that these expenses should not be taken into account when calculating NMW payments. A appealed against the tribunal’s ruling to the EAT.
The appeal
The EAT has now held that both the car rental costs and the staff uniform hire fees should have been included in the NMW calculations, along with all of the other expenses.
The fact these particular expenses were incurred voluntarily was irrelevant as they were both connected to A’s employment.
Practical effect
This means that any costs incurred by an employee or a worker in connection with their employment must now be deducted by the employer when calculating the NMW .
It won’t matter if the cost is incurred through the employee’s personal choice. This specific point should be added to HMRC’s NMW manual in due course (see The next step ).
Burden of proof
The EAT was also asked to confirm who the “burden of proof” rests with in NMW claims.
Tip. Its ruling makes clear that where there’s a dispute over payment of the NMW, it is for the employer to prove that the NMW has been correctly paid; the employee doesn’t have to prove there’s been an underpayment. You should therefore keep accurate records for all NMW payments which include evidence of all deductions that have been made, for at least six years.
For the EAT’s ruling in this case and HMRC’s NMW manual, visit https://www.tips-and-advice.co.uk , Download Zone, year 23, issue 22.
Create your profile to unlock this advice and many more.