The government has asked the Low Pay Commission to review a rule exempting live-in domestic workers from minimum wage regulations.
It comes after an employment tribunal in December found that the exemption was discriminatory against women. The tribunal heard extensive evidence that women are far more likely to be employed as family workers than men.
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The exemption, which was originally designed to apply to au pairs, applies to workers who live in an employer’s family home and are treated “as a member of the family” and benefit from accommodation and meals. But the tribunal heard that the rule has also been applied to maids and other servants, many of whom are migrants.
Despite the successful case, employment tribunal judgments are not legally binding precedents beyond an individual case, and so a rule change would be necessary to apply the same principles automatically to other workers.
National minimum wage in the UK
Labour’s 1998 National Minimum Wage Act established the Low Pay Commission to set Britain’s first ever National Minimum Wage. It began in April 1999 at £3.60 an hour for adults aged over 22. Around 1.2m adults ended up with an average pay rise of 10%. The policy was opposed by the Conservative party, who argued that it would create extra costs and cause unemployment. Michael Howard had claimed the policy would cost 2 million jobs.
The rate increases by 10.8% to £4.10 – the largest percentage increase until the introduction of the ‘National Living Wage’.
After a decade, the rate is now set at £5.80 an hour for those over 22. There are two bands of pay for younger workers, £4.83 an hour for those 18-21, and £3.57 for those aged 16 and 17.
Tory Chancellor George Osborne announces a rebrand to the ‘National Living Wage’, a higher minimum for workers aged 25+, with a target for the rate of hit 60% of median earnings by 2020.
1 April 2016
The Conservative government splits the minimum wage into five pay bands. Those 25 and above get £7.20 an hour. There are bands for those aged 21-24, 18-20, 16-17, and a new lower paid band for apprentices at £3.30 an hour.
The number of workers said to be ‘covered’ by the rate – i.e. paid within a few pence of the rates – has risen from 830,000 in 1999 to 2 million in 2018.
Bryan Sanderson, Chair of the Low Pay Commission, says that “We estimate that the combined effect of upratings on the lowest paid workers, and those paid just above them in the wage distribution, has been to increase their pay by £60bn in real terms over the first 19 years of the minimum wage. The very lowest paid now have hourly pay around £2.70 more in real terms than would have been the case in the absence of the National Minimum Wage.”
Chancellor Sajid Javid announces that the government intends to increase the “national living wage” from £8.21 an hour to £10.50 an hour by 2024. Javid’s plan also lowers the age limit at which people can receive the national living wage from 25 to 21.
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Jamila Duncan-Bosu, a solicitor from the legal charity Anti Trafficking and Labour Exploitation Unit, which brought the successful case, welcomed the LPC review.
She said: “This is a loophole that has been a conduit to slavery. Traffickers have used [it] to bring in women to households who suffer all kinds of abuses. I welcome the fact that the government has asked the Low Pay Commission to look at the issue, but it is disappointing they have waited so long.”
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The government has asked the commission to present findings on which employment sectors use this exemption, how often it is used, and the impact on the labour market, particular with regard to equality. The commission is to report by October this year.
A spokesperson for the Business, Energy and Industrial Strategy Department (Beis) said: “The UK has one of the best workers’ rights records in the world, and one of the highest minimum wage rates in Europe.
“However, we are not complacent, and take any indication of discrimination extremely seriously. We have therefore asked the LPC to investigate the domestic workers’ exemption, and whether it is still fit for purpose. Our next steps will be carefully considered, and will be based on the evidence we receive from the LPC.”