The Implications Of Wrongful Deduction Of Wages And National Minimum Wage
In a recent case (6th Feb 2019) – Middlesborough FC have been cleared from breaching NMW 1998 rules. Historically Middlesborough Football Club had given their staff the option of purchasing football season tickets via their wages. A large number of staff agreed to this and the employer made the relevant deduction. What the employer failed to recognise when making this deduction was that it breached NMW rules as their hourly rate of pay dropped. HMRC investigated this and took the club to Employment Tribunal. After a gruelling two years, the club appealed the decision and successfully won their case. The club demonstrated that they were helping their employees to spread the cost of season tickets payments which was accepted by the EAT.
HMRC response was that the NMW 1998 is a protective legislation where no worker can agree to receive less, therefore the club should not have done this.
This situation is not unique as Iceland Frozen Foods now face similar employment tribunal claims by HMRC who have stated that Iceland had also breached NMW legislation (Jan 2019). Iceland offered an optional savings scheme (Christmas Club) to its staff whereby an agreed deduction was made. Again by making this deduction through payroll the hourly rate shown was below the NMW. Iceland intends to challenge this case and we eagerly await the outcome.
YBC members can access advice on this and other HR & employment issues by calling the YBC Support Helpline which is included for free as part of thier memership.