Legislation designed to close a legal loophole that allowed families to avoid paying live-in domestic workers the national minimum wage has been passed by MPs.
The National Minimum Wage (Amendment) (No. 2) Regulations 2023, a statutory instrument that passed through Parliament this week, removes the live-in domestic worker exemption under the National Minimum Wage Regulations 2015 that states that tasks done by an individual who resides in an employer’s home are not “work” and does not need to be paid the legal minimum rate.
The exemption was introduced in 1999 mainly to facilitate au pair placements, which allowed young people from abroad to participate in cultural exchange through living with a family in the UK. In exchange for accommodation, au pairs would be given light housework or childcare duties.
The legislation stated that if the individual was genuinely treated as part of the family they did not need to be paid the NMW.
Minimum wage
National living wage 2024 rates announced
National living wage increase: implications for employers
Remaining with same employer can ‘trap’ low-paid in underpayment
However, following the 2017 employment tribunal judgment in Puthenveetil v Alexander that found the exemption had led to indirect discrimination in one au pair’s case, the Low Pay Commission (LPC) was asked to look into the exemption.
It heard evidence that employers were using the exemption to exploit domestic workers, who were often from overseas and required to work long hours, over and above the limited tasks the government considered reasonable for an au pair to undertake.
The government accepted the LPC’s recommendation that the exemption should be removed. The LPC’s report in 2021 suggested that the au pair model no longer existed, especially as post-Brexit immigration laws prevent all but those from a limited list of countries working in the UK in this capacity.
Business secretary Kevin Hollinrake told MPs that the exemption was not compatible with most jobs and it was difficult to prove whether somebody is being genuinely treated as part of the family.
He said: “The removal of the exemption will remove the inequality facing these workers, who are more likely to be migrant workers and women.
“Protecting workers’ rights, especially those of vulnerable workers, is a priority of this government, and we have taken action to remove this exemption. That does not remove the right to have a live-in domestic worker such as an au pair, or other domestic staff; it just means that they will have to be paid at least the national minimum wage. This is the right thing to do to help protect these vulnerable workers and make it clear that our legislation affects the case law on this issue.”
The removal of the exemption will remove the inequality facing these workers, who are more likely to be migrant workers and women.” – Business secretary Kevin Hollinrake
Labour MP Justin Madders said: “It is pretty clear from the evidence that the exemption for domestic workers had outlasted its original purpose. Although it was clearly drafted with au pairs in mind, [the exemption] is broader than that and fails to properly define the role of an au pair. That has allowed unscrupulous employers to use it as a loophole to exploit domestic workers and fail to pay them the wages they rightfully deserve… That is difficult for a worker to contest, given that their work is undertaken in a private setting.”
The change will come into force on 1 April 2024, when the national minimum wage and national living wage rates increase.
TUC general secretary Paul Nowak welcomed the change in law. “No matter your background or where you come from, everyone deserves to be paid fairly. But for too long, rogue employers have been allowed to exploit live-in domestic workers – paying them less than the minimum wage,” he said.
“Many of these workers are migrant workers who have little other option but to accept poorly paid work. That’s why unions and other civil society groups have long been campaigning to end this injustice and make sure everyone gets paid the minimum wage.”
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
Reward, compensation and benefits opportunities
Browse all comp and benefits jobs
