C & D DH Ltd (t/a Elite Homecarers) v Revenue & Customs

For national minimum wage purposes, remuneration is determined by the statutory scheme rather than by contractual labels. A payment calculated by reference to business mileage, and made to meet a worker’s cost of travel in carrying out the work, must be deducted from remuneration under regulation 31(1)(f) of the National Minimum Wage Regulations 1999. It therefore cannot count towards the minimum wage.

The tribunal must make a realistic assessment of the payments actually made. A purported payroll tax arrangement will not alter that result where the evidence shows payments described as non-taxable pay and calculated by reference to mileage.

The appellant provided domiciliary care and employed carers who used their own cars to travel between clients’ homes. HMRC served a notice of underpayment under section 19 of the National Minimum Wage Act 1998, alleging underpayments to three workers.

The Employment Tribunal dismissed the employer’s appeal by a judgment dated 25 April 2012. It found that amounts paid as non-taxable pay were mileage payments which had to be deducted when calculating the workers’ hourly remuneration.

The employer appealed to the Employment Appeal Tribunal. It contended that it paid only contractual hourly wages and operated tax relief for mileage, rather than reimbursing travel expenses. The central issue was the proper categorisation of the mileage-related payments under the National Minimum Wage Regulations 1999.

1. Appeal dismissed. The Employment Tribunal had made no error of law in upholding the notice of underpayment.

2. The national minimum wage is a statutory construct. Contractual terms may assist in finding the facts, but they do not determine whether a payment must be excluded from remuneration under the National Minimum Wage Regulations 1999.

3. The evidence entitled the Employment Tribunal to find that the employer made payments in respect of business mileage. Payslips recorded non-taxable pay, payroll records identified it as arising from mileage, and the sums were calculated by multiplying business miles by 40 or 25 pence. There was no evidence that the employer was merely operating a payroll tax deduction scheme.

4. Those payments met, or were designed to meet, workers’ expenditure on travel undertaken in performing their work. They consequently fell within regulation 31(1)(f), read with regulation 34(1)(b), and had to be deducted from total remuneration before calculating the hourly rate. After the required reductions, the workers were paid below the statutory minimum.

5. Section 28(3) of the National Minimum Wage Act 1998 did not reverse the burden of proof in the employer’s appeal against the notice, since it was not a contractual recovery claim. The Employment Tribunal had nevertheless considered the evidence without material reliance on that error. Regulation 31(1)(j) was irrelevant because it was not in force during the relevant periods.

• Employment Appeal Tribunal: dismissed the employer’s appeal and upheld the notice of underpayment.
• Employment Tribunal: dismissed the employer’s appeal against the notice of underpayment by judgment dated 25 April 2012.