The National Minimum Wage (NMW) regulations stipulate that employers must pay the NMW for all hours worked by their employees, which includes certain travel times. Specifically, travel time between job sites and for job-related duties during the working day count as working time for NMW calculations. However, travel from home to the first work location of the day and from the last work location back home is generally excluded.
In the recent case of Taylor’s Services Ltd v. HMRC, workers on zero-hour contracts were transported from their homes to various farms across the country to provide poultry-related services, using the company’s minibus. HMRC determined that Taylor’s Services Ltd had not met the NMW requirements, asserting that the workers’ travel time should be compensated at NMW rates. The Employment Tribunal (ET) initially supported HMRC’s view, interpreting Regulations 30 and 34 of the National Minimum Wage Regulations 2015 to mean that such travel time should be paid.
However, the Employment Appeal Tribunal (EAT) took a different stance. It ruled that travel time does not constitute “time work” under Regulation 30 unless it also involves actual work as outlined in Regulation 34, which specifically excludes travel from home to the workplace from the definition of “time work”. The EAT clarified that obligatory travel in the employer’s minibus did not qualify as work under these regulations.
The EAT acknowledged that this interpretation could result in unfairness, noting that workers who are picked up and dropped off at home are not entitled to NMW for their travel time. In contrast, if the employer requires workers to first report to the company’s premises, then the travel from those premises is considered “time work” and NMW applies.
Ultimately, the EAT overturned the ET’s ruling and accepted the employer’s appeal, revoking the notices of NMW underpayments issued by HMRC.
This case highlights the distinction between NMW regulations and the Working Time Regulations, where the latter considers travel time for peripatetic workers (those without a fixed work location) as working time.
Employers should remember the importance of accurately determining what travel time to include in NMW calculations and ensure that employment documentation reflects the legal position to avoid confusion or legal issues. Other common areas of risk for NMW underpayment include incorrect work type determination, unauthorised deductions, unreimbursed expenses, unpaid work at shift start/end and salary sacrifice issues.
In a previous blog post (which you can read more of here), we spoke about how, earlier this year, the Department for Business and Trade issued its latest NMW “name and shame” list, intending to shine a spotlight on employers who have fallen short of meeting the NMW requirements.
In the current environment of increased HMRC inspections and workplace changes post-pandemic, employers are advised to review their policies and practices to ensure compliance and to seek assistance if needed, particularly in defending positions during HMRC investigations.
