The way a transformer operates is that a magnetic field is created by passing current through the primary windings. The secondary windings sense the presence of that field, and react by producing a current. Think of an arc flash as the primary windings of a transformer, creating a sudden and extremely high magnetic field. Now think of your body as the secondary windings. There is a phenomenon called a ?traveling arc,? which is essentially a current flowing down the length of your body, in reaction to the presence of a large magnetic field. If you inner garments are not arc resistant, then they can catch fire, even though they are located entirely within the arc resistance outer garments, leaving you with a very bad day. No, it is not just the outer garments that must be arc resistant. If the arc flash potential is high enough, then you need the inner garments to be arc resistant as well.
As to who buys the protective clothing (i.e., the employer or the employee), that is up to the employer. But I can't think it right for an employer to put an employee into a hazardous postition, with giving the employee the appropriate safety equipment, including the PPE.