Deduction from wages could lead to a breach of National Minimum/Living Wage

Monday 29th November 2021

Payments made by a worker in connection with their employment should be taken into account when calculating whether they are paid the National Minimum Wage (NMW).

The decision in Augustine v Data Cars Ltd clarified when a payment is in connection with employment.


Augustine (A) was employed by Data Cars Ltd (DC) as a taxi driver. After a few weeks, A began renting a vehicle from a company associated with DC. He also paid for his uniform.

A’s employment with DC ended and A brought numerous complaints to the Employment Tribunal (ET), including one for breach of the NMW Regulations.

Initially, the ET found that while certain payments could be deducted from his pay, such as fuel and insurance, not all could, so his pay did not fall below the NMW.

One non-deductible payment was car rental costs, as A was not required to rent a vehicle from the company associated with DC, he could have used his own vehicle or rented a cheaper one. The ET also held that the expense of hiring a uniform was not deductible, as he only needed a uniform if he wanted to do an optional level of work.

A appealed to the Employment Appeal Tribunal (EAT), arguing that both the rental payments and hiring of uniform were deductible.


The EAT upheld A’s appeal, stating that these payments were in connection with A’s employment and were deductible from his pay. Resultingly, A was paid less than the NMW and DC were in breach of the NMW Regulations. Whether or not the payments were a requirement of the employment was irrelevant when DC was calculating A’s pay.


As an employer, you should ensure that a workers’ wage meets the NMW/NLW requirements after all deductions have been made for payments made in connection with their employment, including those that are not necessarily a requirement, otherwise you could be in breach of the NMW/NLW Regulations and face claims from workers.  The NMW Regulations are viewed by many as a minefield and continue to throw up issues for employers.

If you have any concerns or would like any advice in respect of calculating the National Minimum/Living Wage of your employees and what to include, please do not hesitate to contact a member of the employment team.

To view the full November Employment Law Update, click here: