Navigating travel time: ensuring National Minimum Wage compliance

Working time’ for National Minimum Wage (NMW) purposes can cause a real headache for employers and the case law in this area continues to develop as (travel) time moves on.

The National Minimum Wage Regulations 2015 (SI 2015/621) (NMW Regulations 2015) define various types of ‘work’ which includes ‘time work’. Time work is work where the worker is entitled under their contract to be paid (other than any salaried hours work) – a typical example is an entitlement to an hourly rate of pay regardless of the level of output. If an employee is travelling for the purposes of their work (where the worker would otherwise be working), the time spent travelling can usually be classed as time work for NMW purposes except where the travel is between the worker’ home and their normal place of work or the worker’s home and an assignment. A typical example of where travel would be time work for NMW purposes would be travelling between business locations to attend on site meetings.

Earlier this year, the case of Taylors Service Ltd and another v The Commissioners for HM Revenue and Customs [2024] EAT 102 found that employees were not entitled to NMW when travelling from their home to the site where their assignment was to be carried out by transport that was specifically arranged by their employer. This case will be significant for any employers that have a mobile workforce assigned to work at different locations.

What was the case about?

In this case, zero-hour poultry workers were sent to assignments at farms across the country, for which the employer provided a minibus to transport the workers from their homes to their assignments. Unusually, some of the journeys could take as long as eight hours per day. Workers received NMW for time worked on assignment but were only paid £2.50 per hour for travel time. In 2020, HMRC issued Notices of Underpayment plus penalties to the employer finding that the time spent travelling to and from the farms was time work and should be paid at NMW.

The employer unsuccessfully challenged HMRC’s decision and the employment tribunal held that the time spent travelling was ‘time work’ and was not to be regarded as a normal commute. This meant that the employer should have been paying NMW for the time spent travelling.

What did the case ultimately decide?

In a decision that will have come as a huge relief to many organisations, the Employment Appeal Tribunal (EAT) overturned the original decision and determined that the time spent travelling to and from the farms did not qualify as 'time work' under the NMW Regulations. It found that the legislation did not consider ‘just travelling’ to be ‘work’ and unless there was work to be done while travelling, the time spent travelling cannot be time work. This meant that the workers were not entitled to receive NMW for their travel time and the employer could legally pay them the £2.50 per hour.

This decision means that mobile workers will not be entitled to receive NMW for time spent travelling from home to their first assignment or back home at the end of the day if they are collected from home. This is a logical conclusion when it is considered that those who commute to their place of work via their own or public transport also have no entitlement to be paid NMW during that time.

It must be understood that this decision will have no impact on those who perform work during travel or those whose core function is travelling, such as drivers. Similarly, the principle will not apply to travel between different assignments during the working day, which should be paid according to the NMW.

The EAT was clear that travel time for these workers could not be considered ‘work’ even though this creates an injustice namely that if the workers in this case had travelled to their employer’s place of work first and then been transported from there to the farms, that subsequent travel would have had to be paid at NMW whereas because they were collected from their homes they were not entitled to NMW for the travel time.

The purpose of the travel or the employer's requirement for the worker to undertake the travel does not change its classification under the NMW Regulations 2015. It should be noted that this decision only concerns the definition of 'work' for NMW entitlement and does not cover whether the work fell under the definition of working time under the Working Time Regulations 1998.

What does this mean for employers?

Employers in the mobility sector or those with mobile employees who undertake field based roles or roles that primarily require extensive travel need to review their current practices. Some employers might be able to take advantage of this decision by insisting that employees travel directly to their first assignment rather than first attend their normal place of work although others, particularly where a vehicle must be collected, will not be able to benefit in this way. However, employers in this sector can still take appropriate steps to avoid errors relating to NMW compliance in respect of travel time by:

• Training and awareness: providing training for HR and payroll staff on NMW compliance, including specific rules around travel time and the definitions of ‘time work’.
• Audits: conducting regular audits of payroll and working time records to ensure compliance which will assist with identifying any discrepancies and providing an opportunity to rectify.
• Policies: ensuring they have clear policies covering travel time and NMW compliance in place which are communicated to the relevant employees so they understand clearly what travel they will be paid for.

By taking the above steps, employers can increase compliance with the NMW regulations and mitigate against any errors or claims arising.