Employment & Pensions Blog: Should Travel Time be Paid at National Minimum Wage?

The Court of Appeal has recently handed down a significant decision in Revenue and Customs Commissioners v Taylors Services Ltd which provides important clarification for employers on whether the time spent travelling must be taken into account when calculating whether a worker has been paid national minimum/living wage (NMW). 

The Legal Framework

Under the National Minimum Wage Regulations 2015, workers must be paid at least the NMW for time spent travelling for work purposes, but there is an exemption whereby ordinary commuting time between home and a permanent or habitual place of work does not need to be taken into account for NMW purposes.  

Facts 

Taylors Services Limited (TSL) engaged workers under zero hours contracts to work as flock technicians in farms to carry out work such as providing injections, grading, loading and unloading poultry. The company provided minibus transport for the workers by picking them up from their home addresses and driving them to the farms. The journeys were often lengthy, on occasion adding up to eight additional hours beyond the standard working day. Whilst the workers were paid the applicable NMW rate for time spent working at the farms, they were paid just £2.50 per hour for the time spent travelling in the minibus - which is (of course) significantly below NMW.

HMRC (on behalf of the Government) enforces NWM and in 2020 decided that the time that the workers spent travelling to and from farms around the country should be remunerated at the NMW and issued notices of underpayment totalling around £62,000 of wage arrears, plus penalties. TSL disputed this, arguing that the time spent travelling fell within the exemption for travel between a worker’s home and their place of work. 

Employment Tribunal

The Employment Tribunal found in HMRC’s favour and upheld the notices on the basis that the time spent in the minibus was working time. 

The Tribunal agreed with HMRC that the hours spent travelling were “very much longer and more arduous than ordinary commuting,” and the workers were completely under the company’s control at the time. 

As a result, the Tribunal held that the time spent in the minibus should be taken into account when calculating whether the workers had been paid NMW or not. As they hadn’t been once the travel time was factored in, the decision to issue the Notice of Underpayment was correct as was the NMW arrears owed. 

Employment Appeal Tribunal (EAT)

TSL appealed. The EAT overturned the Tribunal’s original decision, finding in TSL’s favour that the hours spent travelling in the minibus should not be taken into account when calculating whether the workers had been paid NMW. The Notices of Underpayment were therefore to be set aside. 

HMRC appealed to the Court of Appeal. 

The Court of Appeal

The Court of Appeal dismissed HMRC’s appeal, confirming that:

• The time spent travelling between home and work, even where the employer had provided the transport, does not constitute 'time work’ under the NMW Regulations.
• The NMW is not payable for such journeys, regardless of their length or inconvenience.
• The NMW Regulations are clear in their exclusion of home-to-work travel, and a purposive or policy-driven interpretation could not override this.

In interpreting Regulation 34 of the NMW Regulations 2015, the Court of Appeal explained that it sets out a general rule: Travel is treated as time work only if it occurs at a time when the worker would otherwise be working (and the purpose of the travel is time work). While the Court acknowledged the potential unfairness in scenarios where workers are subject to extremely long commutes arranged by the employer, it made clear that such policy concerns are for Parliament to reform, and not up for judicial interpretation. 

Implications for Employers

Employers who pay workers low rates of pay/NMW will be pleased with the Court of Appeal’s decision. It reaffirms the key principle that ordinary commuting time, regardless of length or employer involvement, is not generally payable at NMW rates.

However, employers must still be cautious:

• Travel during the working day between assignments or locations will still likely fall within NMW requirements.
• Peripatetic workers (mobile workers without a fixed place of work) remain subject to different rules, particularly under the Working Time Regulations 1998, which may consider travel time as "working time" even where the NMW Regulations do not.

Whilst the Government plans sweeping employment law changes in its infamous Employment Rights Bill, there aren’t currently any proposals to amend the NMW Regulations or to change the above rule on commuting time.  

If you require further guidance on national minimum/living wage, please contact a member of our Employment Team.