Employers are advised to review their procedures as a precaution given the recent actions of HMRC
The question whether employers can require employees to pay for their own uniforms is often misunderstood by employers, HR professionals and business manager. The simple answer is yes, generally employers can expect this of their employee, but only where there is a contractual provision and only if the cost does not reduce pay below the national minimum wage (NMW).
In the past, many organisations have been penalised for requiring employees earning the NMW to pay the cost of their own uniforms. As a result, companies need to be aware of issues regarding the law, payroll compliance, deductions for uniforms, and the difference between a ‘uniform’ and an ordinary workplace ‘dress code’.
What does the law say about work uniform cost deductions?
Employers can only deduct work uniform costs, or require payment from wages or other money due, if the employment contract allows those deductions and the arrangement complies with the law. It is advisable to include clear wording in the contract of employment, uniform policy or dress code policy, and where relevant the staff handbook, setting out the rules, dress requirements and any staff uniform the employer requires, together with whether the employee must purchase it.
For safety reasons, and following a change in the law in 2022, employers must provide necessary protective clothing or personal protective equipment (PPE) where the job requires it.
Employers may require your employees to pay for their own uniform, however HMRC enforcement action shows that extra care is needed where workers are paid at or only slightly above the minimum wage, because the cost must be taken into account when checking whether the worker’s pay falls below NMW and how much pay remaining the worker has after that cost is accounted for.
An employer who requires a uniform at work and requires the employee to pay for it cannot deduct the cost if the worker’s pay falls below NMW.
Employers need to tread carefully with uniform policy and deductions
Employers who specify what employees must wear for the job, but do not regard it as a uniform in the traditional sense, can still fall foul of minimum wage regulations.
Dining chain Wagamama, was forced to refund £133,000 to 2,630 workers for uniform costs. Staff earning the minimum wage rate were required to wear either casual black jeans, black trousers or a black skirt, and HMRC determined that this amounted to a uniform requirement.
Another example is TGI Friday, who had to repay £59,348 to 2302 worker in relation to a requirement for employees to purchase black shoes as part of a uniform policy.
This shows how minimum wage regulations apply when an employer requires specific clothes or clothing for the job. Employers therefore need to tread with caution when asking their employees to purchase or wear certain types of clothing.
In a situation, where the cost of purchasing the uniform would take the employees’ wages below NMW, HMRC states that the employer is legally required to reimburse enough funds to ensure NMW requirements are met.
What difference does a dress code instead of a uniform policy make to the rules?
Where employers do not impose a uniform requirement but instead operate a dress code, the position can be different, although any dress code policy must comply with the Equality Act 2010 and must not discriminate based on protected characteristics. Employers should also make reasonable adjustments for employees with disabilities, and any policy should treat women equally and not discriminate based on sex, religion or other protected characteristics.
According to HMRC, these employers may reasonably expect employees on minimum wage to purchase these items without reimbursement where the request is considerably less specific than, say for example, Wagamama’s requirement to wear black jeans.
Where employers decide to implement a uniform policy, good practice is to make the wording clear, state any required costs expressly, separate optional items or additional items from compulsory uniform costs, and check that the cost will not take wages below NMW.
Employees may also be able to claim tax relief on uniform maintenance, including laundry costs for work uniforms, although not on the initial purchase cost. Basic-rate taxpayers can claim 20% tax relief, and claims can usually cover up to four previous years.
Employers are strongly advised to conduct an internal review of their procedures as a precaution given past HMRC action, including contractual wording, minimum wage compliance, dress code rules and payroll treatment.
