A £300m recruitment group has lost its bid to continue deducting travel expenses from minimum wage payments to workers under a High Court decision issued last week.

Regulations preventing the use of tax-free travel and subsistence expenses from counting towards national minimum wage pay took effect on 1 January as planned, with High Court judge, Mr Justice Kenneth Parker, dismissing a judicial review action brought against business secretary Vince Cable by the multi-sector Cordant Group.

In his decision, Mr Justice Parker said: “I have reached the firm conclusion…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 equity case.”

Tom Hadley, director of policy and professional services at the Recruitment & Employment Confederation (REC), told Recruiter that “it wasn’t just one or two” recruiters who had been operating the salary sacrifice schemes in question. He said that some had “reluctantly” implemented them so that they could successfully compete for business. Implementation of the new regulations will allow recruiters to operate on “a level playing field”, Hadley said.

At the same time, Hadley said, employers needed to recognise that staffing costs at the lower end of the market could rise as a result, but he urged them to see volume staffing of workers at the minimum wage level of the market not as a “low-cost option”.

Representatives of Cordant could not be reached for comment by press deadlines. According to its website, the Cordant Group recruitment companies include Abacus Recruitment, Premiere People, Prime Time Recruitment, PMP Recruitment, Judy Fisher Associates and Grosvenor Boston.