National Minimum Wage

Chapter 4: Compliance and Operation of the National Minimum Wage
proposals from other stakeholders to allow employers to control hours in some way, still pay
by the piece, but not be obliged to make pay up to the minimum wage. In our view this
would risk undermining the basis of the minimum wage – that it is a minimum hourly rate –
and provide a potential loophole for those seeking to abuse and exploit the FPR
arrangements.
4.35 We welcome HMRC’s investigations into hotel cleaning following the Commission’s
recommendation. HMRC’s enquiries have found that the main issue was that these workers
were not paid the NMW for all the hours they worked. We strongly urge the Government to
continue to focus enforcement resource in this sector and also ensure that guidance on
payment by piece rate is revised, and disseminated, as part of our wider recommendations
on reviewing the official NMW guidance and communicating the rules (see paragraph 4.54).
Unpaid Work: Internships, Work Experience and Volunteering
4.36 We made clear in our 2011 Report that we recognised the value of work experience,
particularly for young people new to the labour market, but that we continued to receive
evidence of apparent breaches of the NMW rules. We did not favour suggestions that there
should be a special exemption or rate for interns. We recommended instead that the
Government took steps to raise awareness of the rules for those undertaking internships,
all other forms of work experience and volunteering opportunities. In addition, we
recommended the rules be effectively enforced by HMRC using its investigative powers.
4.37 In September 2011 the Government launched its revised NMW guidance on work experience
and internships. While the TUC and intern groups welcomed the new guidance, they also
called for this to be backed up with tougher enforcement. The Broadcasting Entertainment
Cinematograph and Theatre Union (BECTU), however, pointed out to us what it regarded as
failings in the guidance in respect of the definitions used for ‘worker’ and ‘volunteer’.
4.38 Other guidance also became available over the course of the summer when the Gateway to
the Professions Collaborative Forum (which includes representatives from professional
bodies, related organisations and the TUC) launched its ‘Common Best Practice Code for
High-Quality Internships’. The Code included guidance on remuneration, and the rules for
payment of the NMW.
4.39 The Government advised us it was working to ensure effective enforcement of the minimum
wage in sectors where internships and work experience positions were prevalent. In the
latter half of 2011/12 HMRC commenced targeted enforcement activity. In addition the
PWRH has started fast tracking and referring all calls about unpaid work to HMRC. Initially
the focus of the targeted enforcement was in the fashion and TV/film sectors. BIS and HMRC
would then consider whether to extend the campaign to other sectors in light of HMRC’s
findings. We are pleased to see HMRC publicising the action it is taking with regard to the
targeted enforcement campaign on interns. In October 2011 the Government introduced a
new quality assurance system for vacancies placed with the Graduate Talent Pool. In the first
month of operation, the number of unpaid/expenses only internships dropped from around 40
per cent of the total to 26 per cent. Only 18 per cent of the new, checked, vacancies were in
this category.
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