Middlesborough FC ran a payroll deduction scheme allowing employees to buy season tickets has lost an appeal and must make up the short fall in wages due under National Minimum Wage law.
The scheme allowed employees to agree to buy football season tickets by instalments from their pay. HMRC issued enforcement notices against the club because in some cases, these deductions took pay below the national minimum wage, and said the club would have to make up the shortfall of wages and pay penalties.
Last year The club had successfully challenged the notices at an employment tribunal arguing that the staff had requested the deduction to help spread payments for the season tickets. This was appealed by HMRC and quashed.
The club claimed that “This was never about the money, it was about the principle of the matter and about what we did to support our employees.”
Barrister George Rowell (Exchange Chambers) representing HMRC claimed: “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.”