So how should we define ‘worker’?

Some social services departments appear to overlook national
minimum wage laws when it comes to therapeutic work. Gary Vaux
explains why legal advice must be sought in such matters.

There is a great deal of confusion and complacency about
sheltered or supported employment and the national minimum wage
(NMW).

Day centres where people do work on contracts for local firms
could in fact be breaking the law in not paying the NMW instead of
the usual daily “attendance” money. The attitude at many social
services departments seems to be that it would be too expensive for
the NMW to apply, therefore it doesn’t.

But the law does not permit such an attitude. In NMW legislation
the onus is on the employer to prove that the NMW does not apply,
rather than on the worker to prove that it does.

The guidance¹ is mostly concerned with defining what
is a worker, which is the key issue for deciding whether the NMW is
due. The guidance has the basic fault of being vague – and admits
as such. For example: “Only courts and tribunals can decide legal
cases. Our advice is intended to clarify what the law means but
ultimately there is no substitute for independent legal
advice.”

However, it includes some interesting scenarios, and indicates
what the outcome could be. For example: “Individuals work in a
social services workshop undertaking contract work for a few hours
each day, between one and five days per week. Clients are
technically free to come and go as they please and receive up to
£5 per week depending on work carried out.” The answer, says
the guidance, “will depend on precisely what arrangement is in
place. But the fact that they are free to come and go as they
please must be weighed against the fact that they are paid for work
done and this varies according to the amount of work (it looks more
like a wage than an allowance or other ex gratia payment).”

In other words, there is a possibility that this kind of
activity is “work”, that the trainees are actually workers and
therefore the NMW applies. Only the self-employed and volunteers
working for expenses only are exempt. Volunteers who also get small
sums in “reward” for their time, not related to actual expenditure,
may also find themselves classed as workers.

The guidance also says “in the context of therapeutic work, the
intention of both parties and the wage related to work actually
done may be crucial factors”. Most crucially, it says: “A worker’s
productivity or ability is irrelevant in determining whether a
contract of employment (written, oral or implied) exists.” People
cannot opt out of the protection that the NMW brings, or be opted
out because they have low productivity.

Many authorities set their “allowances” or “rewards” in day
centres at a level that does not jeopardise a person’s income
support – usually below £15 per week. This earnings disregard
goes up to £20 for disabled workers this month anyway. But as
the guidance says: “The read-across to benefit entitlements does
not affect the legal position” (as to whether a person is a worker
or not).

You will need to discuss the local implications – in relation to
Joint Investment Plan on welfare to work strategies as well as
broader issues in day care and supported employment schemes. At the
very least social work staff will need to be referring various
schemes, services or arrangements for legal advice (as the guidance
strongly recommends) as to whether people are workers and therefore
entitled to NMW.

¹ Department of Trade and Industry
information note, The National Minimum Wage and Therapeutic
Work, 2000, from www.dti.gov.uk/
er/nmw/therapeutic.pdf

– Comments on the guidance to Team.NMW@dti.gov.uk

Gary Vaux is head of money advice, Hertfordshire Council. He is
unable to answer queries by post or by telephone. If you have a
question to be answered in Welfare Rights please write to him c/o
Community Care.