Many employers who fully intend to pay their workers the NMW are being caught out by a complex detail of legislation. Those falling foul of NMW (National Minimum Wage) Regulations are being named and shamed, with many of those who are caught out from the hospitality sector (43 most recently) – many of them big names.

Wagamama was named as owing £133,212 to 2630 staff. TGI Friday owed £59,348 to 2302 staff and Marriott Hotels £71,723 to 279 workers.  An employer must make good the underpayment to staff at the current NMW rate (potentially more than the rate at the date of underpayment). In addition to the repayments employers can be fined up to 200% of the money that is owed to staff (maximum of £20,000 per worker).

One of the most common reasons for underpayment of the NMW is failing to pay for staff uniform. Wagamama asked staff to wear casual black jeans with a branded T shirt which they provided.  The restaurant chain fell foul of the Regulations because they did not provide the black jeans or additional pay to cover the cost of them.  In a similar case TGI Friday’s failed to pay staff a shoe allowance.

HMRC has the power to conduct audits to check whether staff are being paid the NMW. One of the issues on the current HMRC watch list is staff uniform.

Uniform – what are the rules?

If staff are required to buy uniform from their employer (even at a discount) then this will count as a deduction and may mean that when staff first start work they are paid less than the NMW in the first reference period. Equally, if staff are required to pay to hire uniform, this will deducted from salary before the NMW calculations are made.

HMRC are taking this principle further and now, as in the Wagamama case, where requirements are that staff wear basic black and white HMRC will still apply a notional deduction from salary to cover the costs of uniform before making the NMW calculations. Wagamama responded by giving staff a notional £50 each to cover clothing costs.  It has also updated its uniform policy and introduced a uniform supplement.

How to avoid breaching NMW

  1. Provide uniform free of charge
  2. Do not impose uniform requirements where staff have to provide their own clothing
  3. If staff are required to pay for uniform, ensure wages are increased so that when the cost is deducted from the first month’s wages the rate of pay is still NMW or above.
  4. Give staff a uniform allowance in the first pay period and at intervals thereafter.
  5. Don’t forget that as an employer you must keep records of pay for 3 years.

More reading on this topic

Another common reason for underpayment of NMW includes trial shifts – see our article on this topic

The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.