Low Pay Commission consultation 2021

Published on 21 June 2021

We have responded to the Low Pay Commission (LPC) consultation 2021 – specifically the bit looking at the live-in domestic worker exemption.

Illustration of people standing around piles of coins

In our response we say we think it is correct for the government to ask the LPC to consider how this exemption is being used and make recommendations appropriately. We think the current provision provides a loophole for potential abuse and we cannot see there is any rationale for domestic workers to be excluded from the minimum wage.

Furthermore, any ‘pocket money’ such workers get is likely to be paid outside a PAYE scheme (because employee earnings need to be at least £120 per week before someone needs to formally register as an employer in most cases). This means there is no data on these workers and employers, HMRC and other enforcement bodies have no visibility to them, and (due to inevitable lack of payslips) the workers will be less well documented. All of this simply compounds the vulnerability of these workers.

In our view, genuine au pairs (who the exemption was originally aimed at) are a different matter, and in our response offer some high-level observations around the potential costs and responsibilities for host families if the exemption were removed for them, based on what we know about those parts of the system within our remit. These include the cost of the minimum wage itself, but also the need for host families to register as an employer with HMRC and comply with other employer obligations like auto enrolment.

The removal of the minimum wage exemption for au pairs may prevent the positive experience of au pairs working in families by making them unaffordable. In addition, the administrative effects of paying an au pair at or above £120 a week, may impose too great a burden on prospective host families. Furthermore, as things stand, it is not possible for them to use Tax Free Childcare or other government childcare initiatives to support them.

One outcome of the consultation, we suppose, is that the government might try to focus the exemption more narrowly on au pairs, rather than remove it altogether, so that its use becomes the exception rather than the rule.

Read our full response here.

Contact: Meredith McCammond (click here to Contact Us)
(21/06/21)

 

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