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Au pairs and the National Minimum Wage

Changes to the law regarding the application of the national minimum wage may well see the end of the engagement of au pairs, unless employers significantly increase their pay.

The national minimum wage was introduced in 1999. The legislation provides that any person who qualifies shall be paid by their employer in respect of their work at a rate which is not less than the national minimum wage.

The underlying policy was that workers should receive pay in the form of cash rather than benefits in kind. It also aimed to stop unfair competition based on artificially low prices due to low rates of pay. Hence, the only non-cash benefit that could be taken into account is the value of accommodation provided by the employer, up to an allowance.

The right to receive the national minimum wage applies to most employees and workers who are over compulsory school age. Advice should be taken if you are unsure whether you are (or you are engaging) an employee, a worker, or someone who falls outside the definition of each, as this is can be a complex area of the law.

There are special rules in relation to certain categories of worker, and this includes "family workers".

As a result of these rules, the following workers are amongst those exempt from the right to receive the national minimum wage:

1. Family members living and working at home, sharing in the tasks and activities of the family;

2. Workers participating in the running of the family business, if they are family members and live in the family home;

3. Workers who live in the employer's family home, are treated as members of the family and not charged for food or accommodation.

Au pairs fall within the 3rd definition of family work, provided that they must be treated as part of the family in respect of the provision of living accommodation and meals and the sharing of tasks and leisure activities.

This exemption meant that au pairs who fell within its scope do not have the right to be paid the national minimum wage. This resulted in most being paid little more than “pocket money” in additional to food and accommodation.

The Court of Appeal has considered the scope of the circumstances in which the exemption should apply. That Court made it clear that the worker must genuinely be treated as a member of the family unit, and whether they are should be considered holistically. The Court also made it clear that whilst the legislation specifically stated that consideration should be given to accommodation, meals, and the sharing of tasks and leisure activities, consideration should also be given to anything else relevant, including the dignity afforded to the worker, the degree of privacy and autonomy afforded, and, if relevant, any element of exploitation.

Draft regulations have been laid before Parliament. These regulations will remove the exemption from the national minimum wage for such live in domestic workers. In March 2022 it was confirmed that the government had accepted the Low Pay Commission's opinion that the exemption was not fit for purpose. This followed a 2014 consultation in which 3 trade unions recommended the abolition of the exemption on the basis that it resulted in the denial of the national minimum wage for migrant workers.

The government has indicated that the change will be made "when Parliamentary time allows", although it is expected that the changes will come into force on 1 April 2024.

No change is made in relation to the exemption for actual family members, referred to above.

Once the change takes effect live-in domestic workers will have to be paid the national minimum wage. However, there remains concern, backed up by University research, that despite this change in the law, many domestic workers will not be able to make claims to enforce their right to be paid the national minimum wage, due to not having a settled immigration status.

This is not legal advice; it is intended to provide information of general interest about current legal issues.

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