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Minimum wage: Wagamama falls foul of uniform rules

13th Mar 2018
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The restaurant chain Wagamama is one of nearly 180 employers named by the government for not paying the National Minimum Wage (NMW). But the restaurant chain's case is notable for another reason: staff uniforms.

All in all, 43 businesses in the hospitality industry featured in the latest list, including names like TGI Friday’s and Marriott Hotels. Around 9,200 workers will receive £1.1m in unpaid wages, and the employers were slapped with £1.3m in penalties.

British-based asian food chain Wagamama topped the list, repaying an average of £50 to 2,630 employees. The Wagamama case, however, is interesting for another reason, however.

A spokesperson for the restaurant chain blamed its underpayment on an “inadvertent misunderstanding” of how minimum wage laws apply to staff uniforms.

Front-of-house staff are required to wear black jeans or a black skirt with their branded Wagamama top. The government considered this asking the staff to buy a uniform.

But as AccountingWEB member New Moon observed on Any Answers, “The case seems to centre around asking staff to wear a particular colour or style of clothing is effectively creating a uniform, even though the items of clothing don’t have a logo and would previously be called dual purpose by HMRC.”

Wagamama said it has updated its uniform policy and it will now pay “a uniform supplement to cover the black jeans”. But it still raises the question: Can non-logo clothes be treated as uniform for tax purposes?

In reply to New Moon’s query, SteLacca said, “I suspect that HMRC would maintain that the jeans are not a uniform, and that they serve a duality of purpose, and so are not an allowable expense, and the payment for them is a taxable benefit (or, if cash/wages - taxable via PAYE).”

RBW provided an excellent answer to the question, noting that it’s helpful to “to bear in mind that what is and isn't pay for NMW purposes is not and never was based on tax definitions”.

He concluded, “As far as I understand it, Wagamama's failure was that they didn’t pay a uniform allowance over and above the minimum wage. They just required employees to wear certain clothing. After deducting reasonable costs of such clothing from the pay the employees were left with a net rate of pay below the NMW.

“The employer could have avoided that NMW failure by (a) paying a specific allowance for clothing or (b) a rate of pay with sufficient headroom to cover the clothing. Either way as far as I can see there's no implication for tax.”

Replies (6)

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By kestrepo
14th Mar 2018 14:20

I'll head with the big question.......can I now claim for the shirt and tie I wear to work?

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Replying to kestrepo:
By paul.benny
15th Mar 2018 11:11

The article is pretty clear that the answer is No.

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By crebourret
15th Mar 2018 09:56

You beat me to it kestrepo...My employer required that we wear business attires ( so not uniform as such) and it is in our contract of employment. I get paid above the NLW, but some of my colleges are just above the NLW, namely apprentices...does that mean that we are all going to receive an additional payment to cover our business attires? somehow, I doubt it very much.

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By Stargazer42
16th Mar 2018 12:50

This is going to far and where does it stop?

Does this mean that if you impose any sort of dress code, such as you have to wear shoes/boots and you can't wear trainers, you will get caught by this ruling?

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Adrian Lawrence
By AdrianLawrence
16th Mar 2018 17:09

That has interesting implications for other industries where for example a licence or annual certification is required.

I worked in a security company many years ago and it became a requirement to have an SIA registration, so I guess this would be treated in the same way unless employees are paid an amount above the NMW enough to cover that cost and so on.

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Glenn Martin
By Glenn Martin
15th Apr 2018 13:09

For me this is typical of how the HMRC choose to enforce rules which where brought in for a totally different reason.

For me this is merely nit picking, this is a very fine line and no staff will have raised a grievance that they were working in breach of NWL guide lines. The £50 they get back is neither here nor there. All big chains work with similar terms for staff, so by cracking one with 100's of branches they can roll it out to others to grab the head lines.

For me the NLW was brought in to to stop the exploitation of low paid staff, the people who work in kitchens or picking fruit who get paid cash at lower than NLW rates of which I am sure there are many.

You hear very little of this type of activity as I imagine its hard to do and its easier just going for a few high profile targets to give the impression that they are doing something about it.

The wagamama staff took the jobs knowing that they had to wear black pants, they did that with an open mind so where is the exploitation, many will all earn significant tips which will take them will above the NLW, which they will be happy to receive as part of their employment, but that will be excluded from pay calculations as not classed as earned income.

Put some resources into those actually break the law and stop using the fine print to profile a few easy targets.

The knock on effects of this ultimately impact the staff as the fines will be funded by a reduction in staff benefits, loss of enhanced rates for bank holidays etc now that the company has to provide free uniforms. So who actually wins?

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