According to the DTI, there are over 700,000 homeworkers in the
UK. These employees must be paid the minimum wage for all hours
worked.
Due to the nature of home working, however, employers may often
have no control over the hours worked, or be aware of how long
their employees were spending on the tasks. For this reason,
current regulations enable employers and homeworkers to enter into
a written agreement known as a "fair estimate agreement."
In such agreements, the employee sets a fair estimate of the
hours needed to complete the task, so that the minimum wage can
then be paid for the hours actually worked, up to the limit set in
the estimate.
The estimate is not regarded to be fair if it is less than
four-fifths of the time an average worker would take to do the same
amount of work in the same conditions. If no fair estimate
agreement is in place, the workers must be paid the minimum wage
for all hours actually worked.
The DTI, however, claims that some homeworkers are still
receiving pay rates below the minimum wage, or are being paid piece
rates for their work, in breach of current legislation.
For these reasons, the DTI said it is planning to amend the
National Minimum Wage regulations, so that employers will be
required to pay all homeworkers either the minimum wage for all
hours worked, or a "fair piece rate."
The fare piece rate proposal will make three changes to the fair
estimate agreement system:
- remove the 'four fifths' rule, which in effect has allowed
employers to pay output workers less than the minimum wage;
- discard the requirement to make an estimate of the hours needed
to complete the task, and instead introduce a requirement for the
employer to set a 'fair piece rate' linked to the minimum
wage;and,
- discard the present requirement to reach agreement with the
worker, and require the employer instead to issue a notice
providing details of the fair piece rate to be paid.
The National Group of Homeworkers welcomed the proposals, saying
the new rules will "simplify the process and make it more difficult
for employers to exploit homeworkers, who can at the moment legally
pay homeworkers only four-fifths of the national minimum wage."
The proposed changes are outlined in a consultation document,
which will soon be available on-line at www.dti.gov.uk/er/nmw
The consultation closes on 9th March, 2003.
