A number of well-known brands have been marred in the media in recent months for failing to pay the correct minimum wage. We have seen 179 employers being ‘named and shamed’ by the government, in particular within the hospitality industry, including Wagamama, TGI Fridays and the Marriott hotel group.
However, before we start branding these high profile companies as rogue employers, the reason for their failure to pay the correct rates has been a misunderstanding of the rules around staff paying for or providing their own uniforms. In short, these employers (and likely a raft more in the hospitality and other sectors) have been working under the incorrect assumption that either charging staff for uniforms or requiring them to provide their own uniforms does not impact on the National Minimum Wage. This is sadly not the case, and collectively these non-conforming employers will have to repay £1.1 million to the 10,000 affected workers along with government fines of £1.3 million.
It is fair to say that the vast majority of the working population would accept it is their responsibility to wear the correct attire for work, whether that be business dress for an office job, protective clothing for working on a construction site or a specified uniform in a hotel, restaurant or shop. However, the relevant legislation sets out that if an employer requires a worker to purchase specific items or wear a particular colour of clothing, any deductions from wages, payment to a third party or the worker’s own pocket will reduce the national minimum wage pay.
So, in the example of Wagamama, the company provide branded t-shirts at no cost, but the staff have to wear their own black jeans or skirt – the mere fact of specifying the colour of clothing the staff had to wear took the company below the national minimum wage calculation. Similarly in the case of TGI Friday’s, staff were provided with a uniform, and had to provide their own black shoes, and again this was considered enough to see them fall short of the minimum rate.
What is clear from these cases is that where employers require staff to either purchase or provide their own uniform, it is essential that they understand the implications in terms of the national minimum wage. Going forward, affected employers either need to fund the uniform costs, provide an allowance for the specific items of clothing or increase the hourly rate of affected staff to ensure they do not breach the rules.
HMRC are clearly clamping down on this area of national minimum wage compliance. By focussing on some high profile brands in the hospitality sector, it has been made loud and clear to employers paying the minimum wage that the common practices around uniform provision are no longer acceptable. Aside from the reputational damage and the headache of arranging back pay, the fines are not insignificant with up to a whopping £20,000 per underpaid worker.
So, employers requiring their staff to “dress to impress” will now also now need to be mindful they impress HMRC and avoid non-conforming uniforming!