Does a car allowance constitute wages?
Johnson v Hampshire Probation Service Employment Lawyer 35, EAT • Johnson was classified an essential car user as he used his car for business. As such he received a lump sum allowance and a mileage rate allowance. When he was reclassified as a casual user he received only the mileage rate allowance. He complained to the tribunal of an unlawful deduction of wages, arguing the lump sum was an emolument rather than a payment in respect of expenses. His complaint was unsuccessful. Johnson appealed, also unsuccessfully. The EAT held that, even if the employee might have profited from the payments, the allowances for the essential car user were to compensate for expenses incurred in carrying out employment. The same applied to the allowance provided to a casual user. There was no difference between the payments made under either classification. Accordingly the payments were not emoluments and there was no unlawful deduction.
