Staff Uniform Costs

Staff Uniform Costs

The National Minimum Wage (NMW) has been the hot topic of discussion in recent headlines, discussing the latest government list that has named and shamed employers who have failed to pay their workers the NMW.

With some employers being in the news for simply not paying their staff the minimum hourly rate, others such as fashion label Karen Millen and chain restaurants Wagamamma and TGI Friday’s have been caught out for the confusion over uniform costs.

If your employees are required to purchase clothing or equipment for their job role, such as tools or a certain uniform, the cost of these should be deducted in calculating whether the NMW has been paid. This applies whether the costs are deducted from wages, or if the employees are expected to provide items themselves. An example of this can be a clothing store who require their staff to wear the brands clothing line in their working hours.

Even though employees are given a discount on such items as clothing, a report from HMRC has stated that the money spent on this “uniform” should have been deducted from wages for the purpose of NWM. Karen Millen were found to have breached the regulations. Having staff provide their own uniforms is common especially in the retail and hospitality sectors, employers need to be careful that they are not paying employees less than the NMW as a result.

What Is A ‘Uniform’?

The issue of uniform has not been brought up to an employment tribunal before so it’s difficult to say for sure for certain on what is classed as a uniform. For Wagamama, their front of house staff are required to wear either black jeans or a black skirt with a branded top. The top is provided by Wagamamma themselves but employees must provide their own jeans or skirt but the cost of these were not factored into NMW calculations.

In the end Wagamma were considered to be paying below the minimum wage and were fined by HMRC. TGI Friday’s were in a similar situation as their staff were required to wear black shoes which they had to provide for themselves. Both these examples show that even requiring employees to wear a specific colour may be classed as a uniform for NMW wage purpose.

Breach Risks

For any employer who breaches the NMW regulations, the consequences can be serious. HMRC is responsible to enforce the regulations and officers can carry out inspections at any time. Failing to pay the NMW can have a wide range of consequences for employers such as:

The Reputation Of The Company

When an employee underpays their workers they will be named and shamed by the Department for Business, Energy and Industrial Strategy (BEIS). The media can also get hold of this and will publish across a wide range of channels, where everyone can see.

Financial Costs

HMRC have the right to fine employers 200% of the total underpayment up to a maximum of £200,00 for each underpaid worker. Employers must also reimburse their employees for these underpayments at the current NMW rates. This means if an employee was paid less than the minimum wage, they are entitled to the difference between what they received and the current NMW and not the rate at the time of underpayment. With rates having increased on April 1st, this could make getting it wrong more costly.

Tribunal Claims

Individual employees can bring claims either in an employment tribunal or to the civil courts.

How You Can Avoid A Breach

There are different ways to avoid breaching these regulations:

  • Provide appropriate ‘uniform’ to employees with no charge
  • Avoid any specific dress requirements
  • Increase employees wages to meet the cost of uniforms. The increase must be sufficient enough as the cost of uniform is counted as a deduction in the first pay period, so if an employee is paid monthly their increase over the month must meet the cost and could result in a significant rise in wages for an employee who is paid weekly.
  • Include an extra uniform allowance in the first pay period to cover the costs.
  • Employers must keep NMW records for three years but, as an employee can bring a claim in of up to five years after a breach, employers may want to hold on to records for a longer period so they are able to defend themselves against any claims.

If you wish to find out more about the National Minimum Wage, please contact our member engagement who are happy to advise you.