Revenue And Customs v Ant Marketing Ltd

It is not necessary to construe the word "employer" in subordinate National Minimum Wage Regulations by ignoring the definition in the National Minimum Wage Act 1998; rather, the statutory definition in s.54 applies unless a contrary intention appears.

Deductions that represent a worker's expenditure in connection with employment are reductions for NMW purposes under Regulation 13(a), even if the deduction is contingent on a later event, and even if the deduction may also fall within the contractual-liability exception in Regulation 12(2)(a).

The appeal concerned whether two types of post-hire deductions reduced remuneration for National Minimum Wage (NMW) purposes under the National Minimum Wage Regulations 2015. One issue was whether rent paid to a separate company owned by the employer's sole shareholder fell within the accommodation offset in Regulation 14. The other issue was whether contractual clawbacks for mandatory training payable on early departure were "expenditure in connection with the employment" under Regulation 13(a).

The Leeds Employment Tribunal had held that the accommodation offset did not apply because the accommodation was not provided by the "employer" as defined in the National Minimum Wage Act 1998, and that training deductions were reductions under Regulation 13(a). The Revenue appealed on the accommodation point. The employer cross-appealed on the training point. The EAT heard the appeal and cross-appeal and addressed statutory construction, guidance, and purposive interpretation.

1. Disposition: Both the appeal and the cross-appeal are dismissed. The Tribunal did not err in its conclusions on either issue (see paras [45]; [61]; [63]).
2. Accommodation offset (Regulation 14): The word "employer" in the Regulations is to be read by reference to s.54 of the National Minimum Wage Act 1998 unless a contrary intention appears. No contrary intention appears in the 2015 Regulations or their legislative history. Accordingly the Tribunal was entitled to treat the accommodation as not provided by the respondent-employer where ownership/landlordship lay with a separate company (paras [26]; [40]; [44]).
3. Scope of "provision of living accommodation": The EAT observed (obiter) that the phrase "as respects the provision of living accommodation by the employer" is wider than mere ownership. Had the appeal been advanced on that broader basis the outcome might have been different. The guidance and purposive interpretation address provision rather than identity of the employer (paras [43]; [46]; [47]; [48]).
4. Training deductions (Regulations 12(2)(a) and 13(a)): The Tribunal was correct to treat mandatory training deductions as reductions under Regulation 13(a). Mandatory training required to obtain employment constitutes expenditure "in connection with the employment". The contingent nature of the deduction (payable only if the worker leaves within 12 months) does not prevent Regulation 13(a) applying. A deduction may fall within more than one Chapter 2 provision but may only be subtracted once (paras [19]; [49]–[61]).
5. Guidance and purposive construction: Guidance and the Low Pay Commission materials are relevant to purposive construction but cannot displace clear statutory definitions. Guidance may explain situations constituting "provision" but does not alter the statutory meaning of "employer" (paras [35]; [40]–[42]).
6. Orders: Appeal dismissed; cross-appeal dismissed (para [63]).

• Employment Appeal Tribunal: Appeal from Leeds Employment Tribunal dismissed; judgment given by HHJ Choudhury (President) (paras [1]; [45]; [63]).
• Leeds Employment Tribunal: Original decision upheld in part and reversed in part on accommodation and training deductions; decision remitted to EAT on appeal (see summary and paras [19]–[27]).