Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Latest NewsEmployment tribunalsMinimum wageSalary Sacrifice

HMRC successfully appeals tribunal ruling on national minimum wage

by Adam McCulloch 23 Mar 2020
by Adam McCulloch 23 Mar 2020 Photo: Rex Features
Photo: Rex Features

Middlesbrough Football Club was last week on the wrong end of an Employment Appeal Tribunal judgment that reversed a ruling made a year ago over deductions to payments to staff.

The club had been operating a payroll deduction arrangement allowing its employees to agree to buy football season tickets by instalments. In some cases, these deductions took the pay received by employees below the national minimum wage. HMRC subsequently issued enforcement notices requiring the club to make up the shortfall of wages and pay statutory penalties.

Early last year the football club successfully challenged the Middlesbrough employment tribunal’s ruling. The tribunal found that the deductions amounted to “payments as respects the purchase by the worker of goods or services from the employer”, which is one of five reductions in pay allowed in the NMW regulations 2015.

National living wage increases

Budget 2020: National living wage to hit 66% median earnings by 2024

Minimum wage pledges will benefit the wrong people

Minimum wage rises will ‘not end low pay alone’

Football club wins minimum wage case

But last week HMRC overturned this ruling on appeal. The main issue was whether a deduction made at source by the employer, and kept in the employer’s bank account for its own use, met the statutory definition of “payment [for] purchase of… services.”  The EAT, presided over by Judge Auerbach, held that it did not.

The tribunal panel ruled that the legislation deliberately contrasted payments and deductions, and permitted only the former. Previous case law had sought to ensure that the wages of low-paid workers actually reached their pockets and they were therefore more likely to make a genuine choice as to whether to make a purchase from their employer or not.

Middlesbrough FC ran three alternative arguments for upholding the tribunal’s decision. These were all rejected by the EAT. It held that the payroll deductions were for the employer’s “own use and benefit”; the deductions were not “in respect of the worker’s conduct, or any other event”; nor were they made on account of a “loan” or “advance of wages”. Finally, the EAT rejected the club’s argument that new guidance issued by the Department for Business Energy and Industrial Strategy in February 2020 supported its position.

Barrister George Rowell from Exchange Chambers represented HMRC at the employment tribunal and EAT. He said: “This judgment brings a welcome clarification to an area of law which was thrown into confusion by the decision of the Middlesbrough employment tribunal last year. It upholds the fundamental principle that employers are responsible for complying with the minimum wage rules and are barred from contracting out of them except in very limited circumstances.

“Payroll deductions which take pay below the minimum wage are allowed only within clearly defined statutory exceptions, which do not include schemes to buy the employer’s products.

“It is now clear that the law requires the money to reach the employee’s pocket before it may be used to make a purchase from the employer. As the employment appeal tribunal held, this approach serves the minimum wage’s purpose of protecting low-paid employees and avoids the need for extensive investigations as to whether the employee exercised a genuine choice about making the purchase or not.”

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

It is thought a possibility that the football club may take the issue to the Court of Appeal.

Latest HR job opportunities on Personnel Today

Browse more human resources jobs

Adam McCulloch

Adam McCulloch first worked for Personnel Today magazine in the early 1990s as a sub editor. He rejoined Personnel Today as a writer in 2017, covering all aspects of HR but with a special interest in diversity, social mobility and industrial relations. He has ventured beyond the HR realm to work as a freelance writer and production editor in sectors including travel (The Guardian), aviation (Flight International), agriculture (Farmers' Weekly), music (Jazzwise), theatre (The Stage) and social work (Community Care). He is also the author of KentWalksNearLondon. Adam first became interested in industrial relations after witnessing an exchange between Arthur Scargill and National Coal Board chairman Ian McGregor in 1984, while working as a temp in facilities at the NCB, carrying extra chairs into a conference room!

previous post
Chancellor announces grants to cover 80% of wages
next post
Supermarkets create 30,000 jobs to meet surging demand

You may also like

Restaurant tips should be included in holiday pay

21 May 2025

Fewer workers would comply with a return-to-office mandate

21 May 2025

Redefining leadership: From competence to inclusion

21 May 2025

Pay awards in real terms could fall for...

21 May 2025

Ryanair demands flight attendants pay back salary increase

21 May 2025

Consultation launched after Supreme Court ‘sex’ ruling

20 May 2025

Uncertainty over law hampering legal use of medical...

20 May 2025

Black security manager awarded £360k after decade of...

20 May 2025

Employers ‘worryingly’ ignorant about stress risk assessments

20 May 2025

UK and EU agree to collaborate on ‘youth...

19 May 2025

  • 2025 Employee Communications Report PROMOTED | HR and leadership...Read more
  • The Majority of Employees Have Their Eyes on Their Next Move PROMOTED | A staggering 65%...Read more
  • Prioritising performance management: Strategies for success (webinar) WEBINAR | In today’s fast-paced...Read more
  • Self-Leadership: The Key to Successful Organisations PROMOTED | Eletive is helping businesses...Read more
  • Retaining Female Talent: Four Ways to Reduce Workplace Drop Out PROMOTED | International Women’s Day...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+