Firms warned over wage deductions
Employers who supply accommodation to their employees should be wary when making wage deductions to cover utility costs following a landmark ruling handed down by the Court of Appeal.
The decision means bosses at holiday camp companies Butlins and Haven will be forced to shell out almost £1m in refunds to workers.
During 2004 and 2005, Leisure Employment Services, which owns both firms, deducted £6 per fortnight from salaries of employees living on site to cover utility bill costs. However, the deductions meant that wages for many staff fell below the national minimum wage level.
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Voluntary and mandatory
Did this judgment arise because the deduction was made mandatory by the employer? Can someone confirm that “voluntary” deds. are allowed to take the employee below NMW? e.g. if employee opts for “child care vouchers”, value of which reduces salary; if below NMW, would that be illegal?
sorry Alan
Sorry Alan but even voluntary deductions, such as Childcare Vouchers, must not take the employee below the NMW.
Info from DTI web site
I have since been pointed to the detailed NMW guide, found at http://www.dti.gov.uk/files/file11671.pdf.
Item 85 states:-
Payment for goods and services provided
by the employer
85 A worker may want to buy goods (shoes, clothing, hi-fi) or
services (for example, meals) from his own employer. If he
is completely free to choose whether to buy from his
employer or from somewhere else, the amount of the
purchase price is not taken away from the amount that
counts towards minimum wage pay. The worker cannot
subsequently claim that by having bought the items from
his employer, he has not been paid the minimum wage.
and item 82:-
Deductions that are not for the
employer’s own use or benefit
82 A worker may want to have other sums deducted
automatically from his pay, for example, a union subscription
or the worker’s pension contribution. Such deductions from
wages count towards minimum wage pay, so long as they
are not for the employer’s own use or benefit. In other
words, so long as they are deductions that do not go into
the employer’s pocket.