Government beats off minimum wage challenge

Thursday 30 December 2010 15:22

The Government today fought off a legal challenge against new minimum wage legislation which comes into force on New Year's Day.

A High Court judge in London rejected criticism of a change in the rules which determine what should count as forming part of an employee's remuneration.

Mr Justice Kenneth Parker dismissed a judicial review action brought against Vince Cable, the Secretary of State for Business, Innovation and Skills.

He ruled that there was nothing unlawful or irrational in relation to a legislative amendment to the Minimum Wage Regulations relating to the treatment of travel expenses payments.

The judge announced: "I find nothing irrational, unlawful or disproportionate in the conclusion reached by the Secretary of State that the amendment will materially simplify the regulatory regime for the minimum wage and, in particular, will materially enhance the ability of both employer and low paid employee to recognise whether or not they are paying and receiving at least the minimum wage prescribed by law."

The challenge was brought by the Cordant Group, a company with a number of subsidiaries which provide manpower staffing services in the security, cleaning and recruitment sectors to major companies and public sector organisations throughout the UK and Eire.

In his ruling the judge said Cordant "employs about 30,000 employees, many of them in unskilled jobs that are paid at or near the national minimum wage, and has for several years operated arrangements that will be affected by the challenged legislative change".

Mr Justice Parker said that with effect from January 1 an amendment to the rules meant that payments made by an employer to a worker in respect of travelling expenses "that are allowed as deductions from earnings under section 338 of the Income Tax (Earnings and Pension) Act 2003" will not count towards meeting the obligation to pay the national minimum wage.

In rejecting permission to appeal, the judge said he had reached the "firm conclusion at the end of the day that this challenge was an attack on the economic merits of regulatory reform affecting the labour market in the guise of a common law and legal equality case".

He added: "I can discern no arguable basis why this amendment, which in what I have found to be the lawful conclusion of the Secretary of State brings substantial benefit to low paid workers, and is in the public interest, should not be implemented, as planned and announced, on January 1 2011."

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