New law balances travel expenses and minimum wage

Employers will not be able to deduct travel expenses from employees on the minimum wage under a new law that took effect on New Year's Day.

The law came into effect, despite a challenge by employment and services agency, Cordant. The company who sought permission to appeal the law, only to see their challenge thrown out by a High Court judge.

The new legislation makes it illegal for companies to deduct travel expenses from employees being paid the minimum wage, assuring that every employee on the minimum wage - currently £5.93 an hour - is paid that amount in full. The law effectively sets out exactly what is and isn't counted as part of a wage.

In rejecting Cordant's appeal, Mr Justice Kenneth Parker said the new law it made it easier to discern whether an individual was receiving a payment - therefore actually helping a company to stay within the law.

His decision marked a victory for business secretary, Vince Cable, who was the key orchestrator of the amendments. Mr Justice Parker said that he had come to the "firm conclusion" that Cordant's 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".

Cordant contested, however, that the law will do away with tax reliefs previously connected with travel expenses and that low-paid workers will actually see a cut in their take-home wage.