Updated Minimum Wage Guidance - Unpaid Work Trials Inclusion
The Department for Business, Innovation & Skills (BIS) has published updated guidance for employers on calculating national minimum wage which includes guidance on unpaid work trials.
National Minimum Wage
National Minimum Wage (NMW) legislation provides that an individual who is a 'worker' for minimum wage purposes must be paid the NMW. Within the guidance, the term NMW covers both NMW and the National Living Wage.
Many employers use unpaid trial work periods as a legitimate part of their recruitment process. The current law does not define what a 'trial work period' is, or when during a work trial NMW must be paid. The updated guidance seeks to assist employers in determining if a trial work period is subject to NMW or not.
The guidance highlights that the following factors will generally be taken into account by courts and tribunals:
- whether a 'work trial' is genuinely for recruitment purposes;
- the length of the trial period;
- the extent of observations during the trial;
- the nature and value to the employer of the tasks; and
- whether the trial period is important to the employers business (e.g. are they being used to reduce labour costs?)
One of the key considerations will be the length of the trial - the longer a trial continues the more likely it will result in NMW being payable. The Government's view on lengths of trial work periods is that any trial longer than one day is likely to incur NMW in all but very exceptional circumstances.
What Does This Mean for Employers?
While ultimately payment of NMW during work trials will need to be assessed on a case-by-case basis by HMRC and potentially the courts, the updated guidance highlights some helpful factors which are likely to be taken into account and serves as a useful reminder to employers.
This updated guidance also demonstrates the continued focus on enforcement of the National Minimum Wage and National Living Wage. This can also be seen in recent statistics from HMRC which showed that £15.6 million worth of underpayments owed to employees were identified in 2017/18.