Where workers earn the National Minimum Wage (NMW), you could be breaking the law if you require them to purchase clothes for work.
You may have seen the media surrounding the fines the likes of Wagamama and TGI Fridays have faced which sets guidelines on what employers should absorb the cost for. Don’t think that HMRC will only impose fines on large companies either, 179 were named to have been fined back in March including lots of businesses with only a handful of employees.
Where you require workers to wear Personal Protective Equipment (PPE) you cannot require them to pay for this. (Section 9, Health and Safety at Work Act 1974) You can require them to purchase it and reimburse them for it however the equipment must meet the necessary standards.
Business Minister Andrew Griffiths has stated: ‘There are no excuses for short-changing workers. This is an absolute red line for this government and employers who cross it will get caught - not only are they forced to pay back every penny but they are also fined up to 200% of wages owed.’
Use of the word ‘worker’ is not indicative of employment status in this article.
What needs to be reimbursed?
If you would like to require workers to purchase uniform and have a mix of employees on different pay scales then there needs to be a clear uniform policy and you will need to pay the difference for those where deductions will take them below NMW.
If there is no policy then the full amount for expenses incurred in connection with their employment should be reimbursed.
What constitutes uniform?
Uniform is to be intended in the broadest possible way, it will incorporate items such as jeans, plain flat shoes and items of a certain colour or style. It also covers branded material.
They may buy the ‘uniform’ from yourselves or third parties either by way of paying freely or through deduction.
Any requirement to wear a specific colour or type of clothing to fit with corporate image will need to be reimbursed regardless of how prescriptive the requirement is. The employee just needs to prove that is it expenditure in connection with the employment.
What if we give workers uniform allowance?
This applies to retailers selling clothes. If you allow workers to buy clothes at a discount but the employee instructs you to deduct the money from their pay, this will not reduce the NMW payment. However, any requirement to wear clothes produced by the employer whether purchased freely or the amount deducted from the employees pay, would constitute reduction in pay.
What counts as a reduction in wages for HMRC purposes?
If you require workers to purchase certain items of clothing or shoes to carry out their duties, this is expenditure in connection with the employment so would count as a reduction in their earnings.
If there are any uniform stipulations or direct requirements you will need to ensure you cover the cost where the NMW payment is reduced. It will be reduced where:
- There is a wage deduction by employer
- Payment is from worker to employer
- Payment is from worker to third party
How do I calculate if the person has been paid the NMW?
To find out whether a person has been paid the NMW you need to know the persons average gross hourly rate. You can work this out by doing:
Total number of hours worked over the pay reference period ÷ The total remuneration earned over the relevant pay reference period.
To calculate whether deductions will bring someone below the NMW you need to deduct any uniform payments from the Gross pay.
Can I deduct money if a worker does not return uniform or damages their uniform?
Yes, however there must be a clause in the Contract of Employment to enable you to do this or you will be liable for unlawful deduction of wages.
If you are contractually able to do this, legal deductions will not reduce the NMW payment as it is a contractual right.
In order to make a complaint about uniform reductions from wages, workers only need to contact ACAS for free advice or submit an online form and the government can conduct a full investigation and require back-payments for people who no longer work there.
We can draft uniform policies to clearly outline what the company will be liable to cover the cost for and to ensure workers do not look to recover expenses incurred. We can also ensure that the Contract of Employment allows employers to deduct from wages any losses incurred from misconduct or if the person leaves without returning their uniform.