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HMRC internal manual

National Minimum Wage Manual

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HM Revenue & Customs
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Deductions and payments from workers: examples of conduct relating to ‘any other event’

Relevant legislation

The legislation that applies to this page is as follows:

For pay reference periods commencing

* on or after 6 April 2015; National Minimum Wage Regulations 2015, regulations 12(2)(a)
* before 6 April 2015; National Minimum Wage Regulations 1999, regulations 33(a) & 35(a)

When considering contractual deductions and payments from workers it is necessary to consider both:

  • conduct and discipline (NMWM11060), and
  • conduct relating to ‘any other event’ (NMWM11065).

Examples of conduct relating to ‘any other event’

A deduction made from a worker’s pay or a payment made by the worker to his employer which is both:

  • a specified contractual liability of the worker AND 
  • in respect of the worker’s conduct relating to ‘any other event’

will not reduce national minimum wage pay.

When considering such deductions it is necessary to consider whether the deductions refer to a voluntary deduction for the employer’s use and benefit which is triggered by a worker’s voluntary conduct, such as leaving their employment voluntarily. The following examples demonstrate the issues for consideration.

Example 1 - A worker approached their employer for their support to undertake a degree in Project Management. The employer agreed to support them by funding the degree and providing study leave. The employer made it a condition of their support that the worker repay them the full costs of the course if they leave before the course is completed, or to contribute to part of the costs if they leave within two years of its end date. Both the worker and the employer signed an agreement to this effect.

Twelve months after completing the degree, the worker resigned from their employment to take up another job. The employer made a deduction for part of the cost of the course from their last pay in accordance with the agreement.

  • The decision to undertake the degree was a decision made voluntarily by the worker, it was not a contractual requirement of the employment. The decision to leave the employment was also made by the worker, so the worker is responsible for the circumstances leading up to the deduction. The requirement of regulation 33(a) are met and the deduction will not reduce NMW pay.

Example 2 - A worker approached their employer to support them to study for a Diploma in Computing. The employer agreed to fund the course and provide study leave. The employer made no provisions regarding this training in the workers contract and there was no agreement on the circumstances that would trigger repayment of the costs.

Six months after completing the course, the worker resigned their employment for a career change. The employer felt the worker had taken advantage of them and made a deduction for the cost of the course from the last pay.

  • Whilst the worker is responsible for the circumstances that led the employer to make the deduction there is no contractual liability for the deduction. The worker has clearly benefitted from the generosity of the employer but the employer did not have to provide the funding and made no conditions on the worker to repay their generosity. The deduction does not meet the requirements of regulation 33(a) and will reduce the NMW pay for the worker.

Example 3 - An employer provides a scheme for staff where they will fund and support up to 6 staff to undertake CIPD Level 3 Foundation Certificate in Human Resources Practice.

Workers A, B and C successfully applied to participate on the scheme and signed an agreement with the employer that they would pay a proportion of the costs if they left employment within two years of completing the course.

Eight months after completing the course, Worker A resigned their employment to emigrate. The employer made a deduction for part of the cost of the course from their last pay in accordance with their agreement.

  • To undertake the training was a matter for the worker to decide. Participation on the scheme was therefore voluntary and not a contractual requirement of the employment. The decision to leave the employment was also made by the worker, so the worker is responsible for the circumstances leading to the deduction. The requirements of regulation 33(a) are met and the deduction will not reduce the NMW pay for Worker A.

Fourteen months after the workers completed the course, the employer needed to make cuts and offered voluntary redundancies. Worker B took voluntary redundancy. The employer made a deduction for part of the cost of the course from their last pay in accordance with their agreement.

  • Like Worker A, Worker B is responsible for the circumstances leading to the deduction. The worker was not forced to take voluntary redundancy and the requirements of regulation 33(a) are met. The deduction will not reduce the NMW pay for Worker B.

Eighteen months after the workers completed the course, the employer needed to make further cuts to the workforce and Worker C was made redundant. This was not a voluntary redundancy and the decision to make Worker C redundant was made entirely by the employer. The employer made a deduction for part of the cost of the course from their last pay in accordance with their agreement.

Because Worker C did not choose to leave the employment, the worker is not responsible for the circumstances leading to the deduction. The requirements of regulation 33(a) are therefore not met and the deduction will reduce the NMW pay for Worker C.