Who pays the price for staff uniforms?

Companies that demand workers buy their own uniforms should be aware of pushing them below the national minimum wage. Heena Kapadi reports

Wagamama, Odeon and UCI Cinema Group, and Card Factory are just three of the hundreds of employers who’ve been named and shamed this year for paying their workers a salary below the national minimum wage (NMW) rates. 

Non-compliance with these rates resulted in £1.1m in backpay for 9,213 workers in March 2018, and £1.44m for 22,400 workers in July 2018. As well as enforcing such repayments, HM Revenues and Customs (HMRC) has also levied record fines on employers of £1.3m and £1.97m respectively.

While there are still some employers who intentionally exploit their workers by failing to pay the NMW, with others it seems to be a failure to keep up with the (increasingly complex) legislation that led them (often unintentionally) to break the law. 

To determine whether the NMW has been paid, employers have to consider:

  • five different rates of pay (for apprentices, under-18s, 18-20s, 21-24s and over-25s);
  • whether any deductions or payments due from a worker in relation to expenditure in connection with employment (e.g. the purchase of uniforms) reduce the amount of the worker’s total earnings to below the NMW;
  • anything that does not count towards the NMW (such as benefits in kind or expenses). 

So, asking front of house staff to wear casual black jeans or skirts with a Wagamama branded top constituted a form of uniform which Wagamama should have paid for or reimbursed when calculating its workers’ wages. Wagamama was not allowed to deduct such sums from its workers’ wages if to do so reduced their pay below the NMW. 

Adopting a uniform policy at work might help establish a professional image that attracts and retains customers. It might also be used to promote a company or brand. However, it is becoming increasingly clear that a requirement to wear a specific colour or type of clothing to fit with a business’s image will need to be reimbursed. What is as yet unclear is just how far HMRC will go in enforcing this. 

Could a junior employee working in an office on NMW, who might not otherwise own a suit, argue that he would not buy one were it not for the requirement at work? Would HMRC interpret the NMW legislation in this way? Time, and perhaps enhanced guidance, will tell. 

If the employer does not require the worker to wear a uniform but the worker chooses to wear one, or voluntarily pays for additional items of uniform, payments they make to their employer for this won’t reduce their pay so as to bring it below the NMW.

It is arguable that additional support is needed to address the complexities surrounding the NMW legislation. This could be by way of a dedicated hotline for employers to seek guidance on self-correction without fear of being penalised or clearer advice as to what does and does not count towards the NMW. 

However, employers and HR professionals must also be proactive in ensuring they are aware of the NMW rate rises that usually take effect every April and in carrying out regular payroll audits to ensure that they pay their workers at least the NMW.

For now, it is clear that intent is irrelevant. Whether it’s a small enterprise or a household name, there are huge financial and reputational risks for non-compliance with NMW legislation. To avoid the embarrassment of being named and shamed by the government, a large backpay bill, and the risk of an unlawful deduction from wages or breach of contract claim from employees, employers and HR professionals should ensure they are regularly auditing their pay and benefits and that they understand what is a uniform and, if necessary, account for the cost of uniforms when calculating NMW. 

Heena Kapadi is an employment solicitor at HRC Law