National Minimum Wage (Workplace Internships) Bill — House of Commons, 2016-11-04
Topic: Labor
David Nuttall (Conservative, Centre-right): Before the urgent question, I had just set out some of the ways in which the present Government are enforcing the national minimum wage. It appears, at least on the face of it, to be a system that would benefit those on low pay, but all is not as it seems Not content with the introduction of a national minimum wage, pressure groups began to press for what they termed a "living wage", and in April this year a national living wage was actually introduced. As far as I can see, however, what it amounts to is the creation of an extra tier of the national minimum wage, payable to those aged over 25. At £7.20 an hour, it represents a 50p increase on the minimum wage The living wage was described as a pay rise for over a million low-paid workers across the UK, many of whom would be in low-income households. While that is true, it is worth pointing out that the belief that when a minimum wage is increased the benefit goes to all those in the lowest income groups is far from the truth. In reality, 44% of low-paid workers are in the top half of the household income distribution, because, in many cases, their spouses are earning much more. The fact that one person is on the minimum wage does not mean that the household income as a whole is very low Let me return to the question of definitions. Those who are defined as workers are already covered by the minimum wage legislation. That applies to everyone, whether they are working as apprentices or not. On 1 October, the minimum hourly rate paid to an apprentice was increased to £3.40. The rate for those under 18 was raised to £4, the rate for those aged between 18 and 21 was raised to £5.55, and the rate for someone over the age of 21 who was not on the national living wage was raised to £6.95 The crucial question is this: what is the position of volunteers? They work, surely, and is an intern not a volunteer? That question goes to the heart of the dilemma that faces my hon. Friend the Member for Elmet and Rothwell. After all, no one forces anyone to take up a position as an intern, so by definition they are all volunteers. At present, section 44 of the National Minimum Wage Act 1998 excludes voluntary workers from the national minimum wage. On 9 March 1998, during the debate on the Bill, the former Labour Minister Ian McCartney said: "it does not cover volunteering in non-charitable commercial enterprises. To include that would undermine the Bill, and would go against the principle that volunteering should be for social good rather than a form of cheap labour for commercial profit."—[Official Report, 9 March 1998; Vol. 308, c. 24.] A company can become liable to pay the national minimum wage if the individual receives any payment beyond expenses or benefits in kind. That could include, for example, free tickets to a show if the individual is volunteering in that sector, or a festival or concert in the case of an arts charity. It is clear that the introduction of the national minimum wage has resulted in a raft of new rules and regulations that businesses must be conscious of and abide by. They must be aware of their responsibilities even towards individuals who are, on the face of it, just volunteers. As always, it is relatively easy for big businesses with large human resources departments to comply, but this Bill is intended to cover all employers, large and small. Companies need to be very aware of the responsibilities towards individuals who volunteer One important issue for a company to determine is the status of those who are providing services for them. Ultimately, it is the nature of the actual relationship between a worker and an employer that defines whether someone is a worker or not. This is the key point, and my hon. Friend the Member for Elmet and Rothwell skated over it when introducing the Bill. One can perfectly well envisage a situation where an individual is nominally termed an "intern" but in reality is a worker. In fact, one does not have to imagine anything, because fortunately there is case law on this point, which I will come to shortly. In such a situation a person would not need to rely on any new provisions contained in this Bill; they would simply be able to rely on the existing national minimum wage legislation, and could seek help and guidance from organisations such as ACAS. It is worth putting on record that reporting an alleged breach of the legislation is very simple. Any employee, volunteer or intern who believes that an employer is not complying with the minimum wage legislation and who wishes to report a problem with working hours or the minimum wage can do so by simply filling in a pay and workers’ rights complaint form, which is available on the Government’s website and can then be emailed to HMRC Let us be clear about one thing: the National Minimum Wage Act 1998 contains no reference to interns or internships. Even under the Labour Government of the day, it was clearly the intention that someone doing work experience—or, if we prefer the term, an internship—should not be entitled to the national minimum wage As I have said, we are fortunate that there is case law on situations where an individual is called an intern but where in reality a contractual relationship exists between them and the employer. In 2009, Nicola Vetta brought a case against a company called London Dreams Motion Pictures Ltd. It was heard at Reading employment tribunal on 20 November of that year. Nicola was engaged by the company on an expenses-only basis as an art department assistant. The position was advertised as expenses-only and as an opportunity to gain experience. In email correspondence the claimant, Nicola Vetta, was described by the defendants as "full-time and our main assistant" In another complimentary email from the respondents to the claimant they said: "We are very surprised that you have dived right into the action and within weeks become a key member of the team." Other emails were referred to at the hearing, including one in which it was said that Ms Vetta was running things and assembling a team. After considering all the evidence, the tribunal held that, despite the respondents’ defence that Nicola was not an employee and was merely engaged on an expenses-only basis, in reality she was nevertheless entitled to be paid the minimum wage as she was considered to be a worker. She was awarded £2,174.53 in unlawful deductions of wages, plus accrued holiday pay of £220.91 This could very easily have been one of the internships my hon. Friend the Member for Elmet and Rothwell has been talking about this morning. There are many such cases, but I will touch on one other.