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National Minimum Wage and Volunteers

Added: 17 December 2008

This guide is based, in part, on the House of Commons Library Standard Note on 'National Minimum Wage and Volunteers' (SN/BT/697) (2006). Click here to view a pdf version. This standard note is likely to be updated at some point; you should check on the Commons Library intranet.

The contents below are intended to provide guidance for offices when they take on volunteers and interns. It is not a substitute for legal advice and, if necessary, you should seek professional assistance.

Contents

1. Introduction

2. National Minimum Wage

3. Volunteers’ Employment Status

4. Pupillages and Internships

1.  Introduction

Currently, the law (National Minimum Wage Act 1998) makes a distinction between 'volunteers' and 'voluntary workers'. In Section 44 it exempts the category of 'voluntary workers' from entitlement to the NMW if he/she receives no payment other than expenses incurred.

Volunteers are unpaid and have no obligation to work for the organisation concerned. They receive no expenses or benefits in kind. Constituency office helpers, door knockers, leaflet distributors and so on tend to fall into this category. They are not eligible for National Minimum Wage, as they are not classified as 'workers' under the legislation.

A voluntary worker, on the other hand, is someone who works for a certain type of organisation (i.e., charities, voluntary organisations, associated fund-raising bodies and statutory bodies) who receives no payment other than reimbursement for expenses incurred, subsistence and/or accommodation as is reasonable in the circumstances of the employment, and any training necessary to carry out the work. They may or may not have a verbal or written contractual obligation with the organisation. Most interns will fall into this category. Voluntary workers are also not eligible for National Minimum Wage. Remember, they are not entitled to NMW as they are not defined as worker – they are not under any obligation to work for you and this must be made clear when recruiting and hiring interns. If an intern began to receive regular payments, they would be likely to be eligible for NMW.

The Employment Act 2008 has slightly altered the definition of expenses. In order for organisations to cover a wider range of expenses, expenses incurred which enable the worker to perform his duties are to be regarded in the same way as expenses which are actually incurred while carrying out work (though this does not include accommodation).

Workers are people who work under a contract of employment or a contract personally to perform work or provide services to another party to the contract (but not the genuinely self employed). Paid staff in the charity sector are eligible for National Minimum Wage as in the public and private sectors. It is not possible for any organisation to contract out of the statutory minimum wage obligations.

Section 1(2) states that a person qualifies for the NMW if he or she:

1. is a worker;

2. is working, or ordinarily works, in the United Kingdom under his contract; and

3. has ceased to be of compulsory school age.

Section 54(3) defines a “worker”:  In this Act “worker” (except in the phrases “agency worker” and “home worker”) means an individual who has entered into or works under (or, where the employment has ceased, worked under)—

1. a contract of employment; or

2. any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;

and any reference to a worker's contract shall be construed accordingly.

2.  National Minimum Wage Rates

The NMW applies to most workers and sets minimum hourly rates of pay. It is intended  to benefit business as well by ensuring that companies compete on the basis of quality of the goods and services rather than low prices based mainly on low rates of pay. The rates are set in regulations made by the Secretary of State, with parliamentary approval, based on the recommendations of the Low Pay Commission (LPC).

The rates change on 1st October each year.

New National Minimum Wage rates from 1 October 2008 -

1. Workers aged 22 and over - £5.73 per hour

2. Workers aged 18-21 - £4.77 per hour

3. Workers aged 16-17 - £3.53 per hour

Accommodation offset - £4.46 per day (£31.22 per week)

For free confidential advice about the National Minimum Wage call the National Minimum Wage Helpline on 0845 6000 678.

3.  Volunteers’  Employment Status

Although guidance has been issued both by the Department for Business, Enterprise and Regulatory Reform and by the National Council for Voluntary Organisations (NCVO) on the application of the law to the 'voluntary worker' group, it continues to cause problems. Many charities and not for profit organisations are looking for clearer guidance on a variety of points, for example, how widely 'out of pocket expenses' can be defined. This was, to some extent, cleared up in the Employment Act 2008 (see above) which slightly widened the definition of expenses.

This question of whether someone is entitled to NMW will depend on whether an individual will be legally classed as a 'worker' within the meaning of the legislation. This is often a tricky legal question. In general, the necessary elements of mutual obligation and contract would need to exist for an individual to be classed as ‘worker’ and therefore entitled to NMW. For example, there may be no mutual obligation if the person would be free to go at any time.

Examples

1. A member of a charity who helps out from time to time at jumble sales for no pay and under no obligation is not entitled to the national minimum wage. He does not have any form of contract and does not count as a “worker”.

2. A worker for a community group who has set hours and is paid a wage is entitled to the National Minimum Wage. He fits the definition of a worker and whether the employer in such cases is a charity or voluntary organisation is irrelevant.

3. A volunteer worker in a hostel with charitable status who receives free accommodation and food as well as expenses for any travel undertaken as part of the job, but who does not receive any monetary payments, is not entitled to the National Minimum Wage.

4. The volunteer who works in a hostel but who receives cash payments such as a regular wage is likely to be entitled to the National Minimum Wage.

4.  Pupillages and Internships

Interns are generally under no obligation to perform work or provide services, nor are they employed under a contract of apprenticeship, which is covered by the definition of contract of employment in section 54(3) (a) and, as such, interns are unlikely to be considered as' workers' under the Act and therefore unlikely to be eligible for National Minimum Wage. However, each MP/researcher/intern relationship is undertaken on different terms, and frequently changes, so you need to be sure that you are not breaking the law at any time.

There may be a similar lack of mutuality of obligation in the relationship between interns and those who engage them such that they would not be defined as ‘workers’ under the Act.

Interns often request an internship to spending some time in their sponsor’s office and to accompany them on their duties for reasons purely in their own self interest. These reasons include learning about the work of the sponsor, networking in the sponsor’s professional environment, gaining a valuable reference for his/her CV, using his/her time with them for their CV as evidence of work experience etc. Thus, the intern’s main purpose for entering into the arrangement are often educational and purely personal rather than to provide services to another; and the sponsor will often not be entering into the arrangement for the purpose of being provided with services, rather to assist the intern in his/her educational and personal development. Indeed, when considered objectively, there may be very little that the sponsor gains from the relationship. The intern would be a volunteer in the truest sense if they do not expect to be paid and the sponsor does not expect to pay them.

These factors may be evidence that neither party enters into a contract to perform work or provide services in return for a payment of wages and hence the intern is not a “worker” under the Act and also that no mutuality of obligation exists in these circumstances. However, simply telling the intern they are not obliged to work will not necessarily get over the problem of employment status ambiguity. Courts will always look at the entirety of the situation, in addition to what the parties have to say.

However, care must be taken that interns are not treated by the sponsor as if they were a worker because then the Act may be taken to apply. To avoid this, a sponsor may take care that the intern is -

• not subject to any obligation to perform work or provide services
• regular payments are not made to the intern

Given that such factors may give the intern the right to the minimum wage. A court would look at the circumstances of the case to find out what the true' relationship between the parties was to discover whether the necessary mutuality of obligation existed.  

Remember  - you must always make clear that an expenses-only intern is under no obligation to provide services for you, work certain number of hours/days, or perform particular tasks. The emphasis should be on their educational and career development – what you can do for them, rather than what they can do for you. While it is all very well to make the initial promise that an intern is under no obligation, this must be adhered to throughout the internship – even if you find changes to the duties and volume of parliamentary work are threatening to overtake agreements initially made.

Case Examples

2 cases held soon after the passing of the National Minimum Wage Act have looked at the definition of ‘worker’ as defined by the Act. Both indicate that tribunals may interpret the legislation widely.  These are Bain v Post Office Counters [1999] and Edmunds v Lawson [1999].

Bain v Post Office Counters (1999)

Mrs Bains, a sub-postmistress, claimed that under the terms of the Act she was a worker, and therefore entitled to the Minimum Wage. Though Mrs Bains was not an employee – rather her contract was a contract for services – she argued that her contract did fall within the definition of ‘worker’ as defined by the Act. The Respondents argued that as her services were not 'personal' (as defined by Section 54(3)(b)) she was not a ‘worker’ and not entitled to the Minimum Wage. However,  the tribunal disagreed with the Respondent, stating that many of Mrs Bain’s duties and responsibilities would be virtually impossible to fulfil without a fair degree of personal input. For example, her contract stipulated that she had a duty to ensure that transactions were carried out accurately, with reasonable steps to prevent fraud, that documentation was properly completed and timeously dispatched, and any losses incurred by her assistants were to be discharged by the applicant. She was also expected to undertake training sessions in putting the customer first. Her claim was found to have fitted into the definition of worker in accordance with section 54(3)(b) and she therefore won her case.

Edmunds v Lawson (1999)

Ms Edmunds, a pupil barrister, was also successful in her claim. A pupillage was held to be an apprenticeship. The Respondents claimed that Ms Edmunds was there as a volunteer and her twelve month pupillage was purely educational, but the court disagreed. It was held that the claimant (Ms Edmunds had sought a declaration from the Queens Bench Division of the High Court) was a ‘worker’ under section 54(3)(a) under a contact of apprenticeship.

CD/December 2008
with thanks to Victor Keter, the author of the Standard Note 'National Minimum Wage and Volunteers'

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