National Minimum Wage Naming Scheme

Debate between Stewart Malcolm McDonald and Kelly Tolhurst

Tuesday 4th June 2019 Commons Chamber

[Kelly Tolhurst]

I thank the hon. Lady for raising that point about the differences between Departments. I do not personally have the details of that and I have not looked into it, but I will happily do so, and I am more than happy to write to her with a fuller answer.

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

Last time I spoke to the Minister about the use of unpaid work trials and the minimum wage, there had not been a single tribunal case anywhere in the UK in this regard that had been successful. Since that time, there has, but it was in Jersey, where a Polish woman took on her employer and won back the £30 that the tribunal said she was entitled to for the trial. What impact will that have on UK employment law? In the 20-odd years of the National Minimum Wage Act 1998 we have only just this year had one successful tribunal. Does that not tell her that the law is deficient and needs amending, and that unpaid work trials should be outlawed in their entirety?

[Kelly Tolhurst]

The hon. Gentleman is a keen campaigner in the area of unpaid work trials. As I have said on many occasions, in most cases, unpaid work trials, if they are not a small trial that is conducive to the work environment, are illegal. On the back of his campaign and work that had been done before, we issued new guidance in December 2018. As I have said, where a worker feels that they have had a detriment, they are to report it to HMRC or ACAS. HMRC will investigate every complaint. We cannot just judge this issue on prosecutions. We need to judge it on where the detriment to the worker is, and then ensure that they get what is owed to them and that the employer is penalised.

Oral Answers to Questions

Debate between Stewart Malcolm McDonald and Kelly Tolhurst

Tuesday 30th April 2019 Commons Chamber

[Kelly Tolhurst]

I thank my hon. Friend for highlighting prompt payment. It is a particular focus within the Department to tackle late payments, which can be very damaging to small businesses. This week, the Chartered Institute of Credit Management has announced that there are 17 businesses that I have removed or suspended from the prompt payment code to make sure that we highlight where bad practice is occurring. We want to bring business with us. We do know that late payments can have a major impact on small businesses, and I therefore stand committed to ensuring that we do all we can as a Government to end this poor practice.

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

This morning I met Matt Dowling of the Freelancer Club, who adumbrated to me some of the terrible situations that freelancers have faced when trying to be paid, often being coaxed into working for nothing for things like experience. Will the Minister meet me and Mr Dowling to discuss how we might crack down on that?

[Kelly Tolhurst]

Absolutely. I reiterate that this Government do not support the culture of poor payments and late payments. The hon. Gentleman is absolutely right to raise the concerns of those in a particular sector who might face trouble getting paid for legitimate work. I would be very happy to meet him and that organisation.

Unpaid Work Trials

Debate between Stewart Malcolm McDonald and Kelly Tolhurst

Tuesday 5th February 2019 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Glasgow South (Stewart Malcolm McDonald) on securing this important debate. I am proud to serve as the Minister responsible for the national living wage and workers’ rights, and I am pleased to be responding to the debate. I fully agree with the hon. Gentleman that it is wrong to exploit workers through unpaid work trials at the outset of their employment. Workers have the right to be paid the minimum wage when they are deemed to be working, and this must be upheld.

The Government are committed to building an economy that works for everyone through the national minimum wage and the national living wage. We will continue to ensure that the lowest paid in our society are rewarded fairly for their contribution to the economy. All businesses, irrespective of their size or sector, are responsible for paying the correct minimum wage to their staff. The vast majority of responsible employers ensure that they get it right.

The hon. Gentleman and other hon. Members raised examples of constituents and others who had been disadvantaged. Having heard the details, I can say that it is highly likely that those practices were illegal. An individual’s entitlement to the minimum wage depends on whether they are deemed to be a worker. If they are a worker, their employment must pay at least the relevant national minimum or national living wage. Our legislation is clear on that.

Many individuals participating in work trials would be considered to be workers. Therefore, they are already protected under existing legislation and are eligible to be paid the minimum wage from the start of their employment. An employer may wish to test an individual’s skills using a range of kitchen knives in a restaurant kitchen. That would probably have little or no value in terms of work for the employer, so would not require payment at the relevant minimum wage rate.

Clearly, the circumstances of each particular case would need to be considered to confirm entitlement to the minimum wage. However, the case of the 40-hour unpaid trial is, in the view of my Department, likely to be excessive and, therefore, against the law. Similarly, new recruits who are required by their employers to spend time at the outset of their employment undertaking training are entitled to the minimum wage for that time.

The hon. Member for Glasgow South raised the issue of exploitative unpaid work trials in his private Member’s bill of March last year. The Government recognised that concerns had been expressed in the House and in the media. Therefore, we issued new guidance on unpaid work trials on 3 December last year, to provide further clarity for employers and workers. The guidance aims to ensure that workers, especially young people in the hospitality and retail sectors, are not exploited through unfair and excessive unpaid work trials. The guidance sets out a number of relevant factors that should be taken into account, such as the duration of the trial and whether the employee is deriving economic value from the activity.

The Government have clarified their view that work trials that are reasonable, not excessive and clearly part of a legitimate recruitment exercise do not require payment at the relevant minimum wage rate. For example, an employer may wish to test an individual’s skill in a restaurant kitchen through a short trial before hiring that person. That would probably have little or no economic value for the employer, so would not entitle the applicant, but it may well lead to a job offer for the individual. However, unpaid trials are not permitted if they are part of a genuine recruitment process, if they are excessive in length or if they are simply for the financial benefit of the employer.

[Stewart Malcolm McDonald]

I have no quarrel or disagreement with anything that the Minister has just outlined. The guidelines that she has produced are, no doubt, admirable. What is her objection to underpinning them in statute?

[Kelly Tolhurst]

As I have already said, we have an enforcement system for the national minimum wage, which, with the guidance, is focusing on targeting the employers that we need to target. We need to recognise—I was going to come to this point later—that in 2017-18, Her Majesty’s Revenue and Customs investigated and took action against more than 1,000 employers, raising £15.6 million, and affecting over 200,000 workers. That shows that the enforcement work is taking place. HMRC will investigate every worker complaint.

[Stewart Malcolm McDonald]

I am glad that HMRC investigates, but how many of the cases that the Minister has mentioned, in which money has been clawed back by workers who have been deprived of money to which they were entitled, took place in a period that would be considered a work trial, as opposed to when the worker had formally signed a contract and started a new job?

[Kelly Tolhurst]

As part of HMRC’s involvement and enforcement of the national minimum wage, it investigates a number of breaches, including unpaid trials. I can tell the hon. Gentleman that HMRC is currently actively investigating companies in which there is a suggestion of unpaid work trials. Obviously, those investigations are currently ongoing, on the back of the legislation and the guidance that we offered.

Oral Answers to Questions

Debate between Stewart Malcolm McDonald and Kelly Tolhurst

Tuesday 20th November 2018 Commons Chamber

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

3. What steps he is taking to remind employers of their obligation to pay the national minimum wage.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)]

We are committed to ensuring all employers pay their workers correctly. As part of our enforcement strategy, Her Majesty’s Revenue and Customs targets employers with information and advice. In April 2018, we launched a £1.48 million campaign to raise awareness of the national minimum wage rules, particularly in sectors with a high risk of non-compliance. HMRC contacted over 617,000 employers prior to April 2018, reminding them of their responsibilities to pay the higher rate.

[Stewart Malcolm McDonald]

The Government are failing thousands of workers who are falling victim to unpaid trial shifts. The law is extremely grey, and despite my efforts to clear it up, the hon. Lady’s Government talked out my Bill. We know that the guidance the Government produce and reminding employers is not enough. As we go into this Christmas period, when this will be another employment epidemic, will she pledge to make this the last Christmas of the unpaid trial shift?

[Kelly Tolhurst]

Short unpaid trials as part of a genuine recruitment process can be legal. However, longer trials with no prospect of employment are illegal. Individuals working on illegal trials are workers and they are entitled to the minimum wage. I can inform the hon. Gentleman that, as per the communication I have had with him in recent months, I have indeed, with my Department, just reviewed and finalised new guidance on unpaid work trials and work experience for interns, which will be published in the next few weeks.