Uniforms and the National Minimum Wage
The Government has recently named and shamed a significant number of employers for underpaying workers a total of £1.1 million. One of the issues, particularly in the retail, hospitality and hairdressing sectors, concerned employers deducting money from pay for uniforms.
National Minimum Wage (NMW)
All workers must be paid the NMW rate appropriate for their age. When calculating NMW pay, certain sums must be subtracted from the worker’s gross pay, for example any deductions from the worker’s wage packet to cover the cost of tools or uniforms. However, an employer cannot lawfully deduct such sums if this reduces the worker’s pay below the appropriate NMW rate. So, if an employer requires its staff to wear a uniform and requires them to pay for that uniform, it must be careful that this does not result in pay falling below the NMW.
Guidance in the HMRC NMW Manual distinguishes between “required uniforms” and “optional uniforms”.
If the employer requires the worker to purchase specific items, then any deductions from pay, or payments made by the worker to the employer, for those items will always reduce NMW pay. This is the case irrespective of whether the employee buys the uniform from the employer or from a third party, and regardless of whether the uniform is a uniform in the traditional sense (such as a branded outfit) or a more casual requirement to wear a certain colour or type of clothing (even if it is something that the employee may be likely to already own and which could reasonably be worn outside of work).
However, where a uniform is not required, or where a worker chooses to pay for additional items over and above the dress requirements of the employment, any payment to the employer or a third party will not reduce NMW pay. For example, where a hairdresser is required to wear a branded t-shirt and freely chooses to buy a spare one, any payment for the extra one would not reduce NMW pay (although a deduction from the worker’s pay would still reduce their NMW pay).
What does this mean for employers?
Where there is a breach of the NMW Regulations, HMRC can issue a notice of underpayment to recover arrears and can impose a financial penalty of 200% of the wages owed.
Employers who require staff to wear a uniform should therefore assess existing uniform and pay policies to ensure workers are not being underpaid.
Where there is a risk of the NMW Regulations being breached, options include:
- Reimbursing a worker for the reasonable cost of buying the necessary uniform.
- Giving staff a clothing allowance.
- Increasing the rate of pay so deductions do not result in underpayments of the NMW.
- Removing the requirement for staff to wear a uniform.