Jurisdiction(s):
United Kingdom

HMRC v Lees of Scotland Ltd: EAT holds employer-operated holiday savings scheme causes NMW underpayment; deductions for employer’s own use; withdrawals not ‘additional remuneration’; third‑party accounts suggested

Published on: 25 July 2024

Published by a LexisNexis Employment expert

Legal News

Article summary

Commissioners for Revenue and Customs v Lees of Scotland Ltd [2024] EAT 120

What are the practical implications of this decision?

The result appears rather harsh on the employer. The scheme was praised as laudable, its records of each worker’s savings were kept with meticulous care, and savings were always paid out when asked. Its misstep for NMW purposes was retaining those savings in its own bank account instead of placing them with an independent third party. Consequently, the funds were treated as for its own use and benefit—even if that was not the scheme’s primary aim—because, in principle, it could use the money as it wished and earn interest on it. This ruling highlights the uncompromising way NMW legislation will be applied, with no room to consider factors such as the employer’s intentions or that workers were the principal beneficiaries of the scheme. The EAT emphasises that the legislation should be applied in a straightforward manner without needing enquiries into additional matters...

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