Setback for Premium Minimum Wage Plans

Proposals from the Taylor Review of Modern Working Practices to pay casual workers a premium pay rate are now facing a major setback. 

MPs have been told that plans for a new Premium Minimum Wage would be “too confusing” during a review of the proposed plans.

Paying gig economy workers, a premium level national minimum wage would be “over-egging the pudding” according to Sir David Metcalf, the UK’s Director of Labour Market Enforcement.

The Select Committee on Business Energy and Industrial Strategy have been advised by Sir David, who has worked in an advisory role within the government for 10 years. The proposed plans would involve doubling the current number of minimum wage pay levels from 5 to 10.

“When I advised on pay levels there were only two minimum wage rates, and so people knew what they were. An adult rate and a youth rate.

“Now there are five rates. With Matthew Taylor’s suggestion there’d probably be 10 rates. You’d have 1.2 times the five. It does seem to me it’s already too complicated having five rates, but to go to 10 rates would be probably over-egging the pudding,” he said.

Whilst the proposed rates would “incentivise firms to give workers set hours”, the new special rates of pay would result in “confusing workers”.

“Some will be looking for more hours, but having done the minimum wage for 10 years, it worked very well, in my humble view, with two rates,” Sir David said.

While he agreed such a change could be implemented, Sir David explained that workers would find it harder to understand the composition of their wage packet and therefore would be less able to see if they had been fairly paid.

There were firms in the UK who were using a business model “that turns on non-compliance”, he said, and this was cross-sector problem.

When questioned more broadly about employers’ behaviour, and enforcing present legislation, Sir David singled out the Health and Safety Executive for severe criticism, saying that it had failed to “do anything” about enforcing holiday pay. He said he believed that the issue was a far bigger problem than non-compliance with the minimum wage.

He also singled out on-shore garment manufacturers as examples of a sector where many conditions were not compliant with existing workers’ rights, in areas such as Leicester.

Care workers, car washers, construction workers and cleaners were also particularly at risk of exploitation, he said.