National Minimum Wage

Chapter 4: Compliance and Operation of the National Minimum Wage
the issue and provide the sector-specific guidance to which it originally agreed. This stance
was supported by actors we met as part of a visit to London.
4.18 We have again received evidence from stakeholders about the likely impact of the AWRs.
Previously, stakeholders had raised concerns about the additional costs this would put on
businesses, at a time when many were already struggling. A survey published by Allen &
Overy (2011) found that nearly a third of medium and large businesses were planning to
avoid increased costs by terminating agency worker contracts before the 12-week qualifying
period kicked in. It also found that 52 per cent of respondents would employ more fixed-term
workers, as they believed this would be a better option. The survey results showed that 38
per cent of employers would only hire temporary workers subject to the so-called ‘Swedish
derogation’, under which the worker was employed by the agency and therefore not subject
to the equal treatment provision of the regulations, as far as pay was concerned.
4.19 The AWRs have now come into force and we have heard initial reports of how some
companies are getting around the regulations. Some of the evidence we have received with
regard to agency workers relates to unpaid work and hotel cleaners, and these issues are
covered later in this chapter. We will monitor carefully the impact of the AWRs and report
further on this next year.
4.20 Although the Government has updated Business Link and produced guidance on interns,
we share the views expressed by some stakeholders that this does not go far enough in
providing clear guidance for those operating in the entertainment sector. The Government’s
actions have clarified some issues but there is scope to do more. We believe, therefore,
that specific guidance for the entertainment sector should be drawn up, in conjunction with
interested parties, and incorporated in the Government’s overall guidance on the minimum
wage (which we recommend at paragraph 4.54 below).
Migrant Workers
4.21 There has been much conjecture about the effect that migrant workers have had on
employment levels and wage rates of UK nationals. Academic research suggests that overall
migrant workers have had a positive impact on the UK economy by filling gaps in the labour
market. However, that research also suggested that there had been downward pressure on
wages at the bottom of the distribution but that the NMW had prevented wages falling
further. At the time of writing this report, the Government has received further advice from
the Migration Advisory Committee on the impact of immigration.
4.22 In our 2011 Report we noted the enforcement action the Government had undertaken in
order to address the issues faced by migrant workers. In addition, having received evidence
about the problems faced by migrant domestic workers (MDWs), many of which go wider
than the NMW, we urged the Government to ensure that complaints from MDWs were given
a high priority. In response the Government advised that it had worked with staff on the Pay
and Work Rights Helpline (PWRH) to ensure that the advice they provide to MDWs was as
accurate as possible.
4.23 In evidence, the TUC said that there was compelling evidence that a worrying number of
MDWs were abused in ways that go far beyond not paying the NMW, sometimes involving
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