A recent tribunal has ruled that HM Revenue & Customs (HMRC) were wrong to penalise Middlesbrough FC for a supposed breach of national minimum wage (NMW) legislation.
Despite HMRC’s claims to the contrary, an employment tribunal has ruled that the organisation’s agreement to deduct staff wages below NMW limits, in order to pay for season-tickets, was not in breach of NMW law.
HMRC had originally issued Middlesbrough with a notice of underpayment for deducting a total of £2,000 from employee’s salaries in 2016. However, Middlesbrough maintained that these deductions were lawful as they had been made at the behest of their employees and not for the benefit of the organisation.
Speaking on the matter, Middlesbrough FC Chairman Steve Gibson stated ‘It is ludicrous that an employer should be penalised for trying to help out an employee …we are not the only employer in this situation, others have been running savings clubs for their employees and have also been penalised."
In recent times we have seen HMRC increase their efforts to crack-down on NMW offenders, including naming and shaming those who unlawfully deduct employees’ wages to cover the cost of various work related items.
However, the tribunal’s decision in this case indicates that deductions which are designed to assist the employee, rather than for the purposes of work, may not be deemed unlawful. This may have an influence on the ongoing dispute between HMRC and Iceland, whose practice of deducting money from staff who wish to take part in a Christmas saving scheme is currently under the microscope.
The HMRC’s loss in this situation highlights the complexities of NMW legislation and the hurdles organisations can face when it comes to managing payroll. April’s upcoming changes to the NMW rates are only likely to add more confusion to the issue, and organisations need to ensure these new rates are reflected in employee salaries from day one to avoid punitive action.
- National minimum wage - overview and in-depth
- Unauthorised deductions - overview and in-depth
- Model document - Letter explaining deductions that have been made from the final pay of an employee