| Employment — National minimum wage — Deductions — Employer deducting sums for utility bills — Whether hourly rate “in respect of” provision of living accommodation — Whether bringing hourly rate below national minimum wage — National Minimum Wage Regulations 1999 (SI 1999/584), reg 31(1)(i)
Commissioners of Revenue and Customs v Leisure Employment Services Ltd [2007] EWCA Civ 92
CA: Buxton, Smith and Wilson LJJ: 16 February 2007
Deductions for utility bills from the wages paid to workers at holiday resorts which meant that their hourly rate of pay fell below the statutory minimum were unlawful. The sums for gas and electricity were “in respect of” the provision of living accommodation within reg 31(1)(i) of the National Minimum Wage Regulations 1999 (SI 1999/584) and the employer was not entitled to make the deduction and treat it as part of the minimum wage where the particular sums exceeded the allocated allowance.
The Court of Appeal so held when dismissing the appeal of the defendant, Leisure Employment Services Ltd, from a decision on 28 March 2006 of the Employment Appeal Tribunal (Elias J) The Times, 17 May 2006 allowing the appeal of the claimants, the Commissioners of Revenue and Customs, from a decision of an employment tribunal sitting at Watford on 10 November 2005 rescinding enforcement notices issued against the defendant in April and May 2005.
BUXTON LJ said that the revenue contended that the requirement upon the applicable employees to pay £6 per fortnight for utility bills brought the employees’ remuneration below the level of the minimum wage for two different reasons, viz (i) that the payment had to be counted as part of the accommodation charge, and since the defendant was already imposing the maximum permitted deduction “in respect of accommodation” for the purpose of reg 31(1)(i) of the 1999 Regulations the £6 payment had to be discounted; and (ii) that the £6 was a charge that had to be discounted in any event because it was imposed for the use and benefit of the employer. To succeed in the appeal the defendant had to resist both contentions; but it failed on the first. Reg 31 listed amounts that had to be deducted from an employee’s wages when calculating whether those wages attained the required minimum, and reg 31(1)(i) required there to be brought into account “the amount of any deduction the employer is entitled to make or payment he is entitled to receive from the worker in respect of the provision of living accommodation by him to the worker ...to the extent that it exceeds the [maximum permitted amount] determined in accordance with [reg 36]”. The regulation did not speak of payments “for” or “as a charge for” the provision of living accommodation, but rather of charges “in respect of” the provision of living accommodation. It therefore on its natural meaning encompassed any charge that was levied in connection with, and certainly any charge that was levied as a precondition to access to, the provision of living accommodation. If a worker was under an obligation, as here, to pay a particular sum of money in order to be permitted to make use of the accommodation on offer, then the sum should properly be described as “being in respect of the provision of living accommodation”. On any view, whether the payment might also be in respect of some things other than the provision of living accommodation, there was no doubt that it was “in respect of the provision of living accommodation”; and since the payment exceeded the allocated allowance the employer was not entitled to make the deduction and treat it as part of the minimum wage.
SMITH and WILSON LJJ agreed. |
