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A decision made (23/02/2007) regarding: Minimum wage - trainee rate - request to accumulate periods of training.

Subject:	Minimum wage – trainee rate – request to accumulate periods of training
Decision Reference:	MD-S-2007-0014		Exempt clause(s):	public
Type of Report: (oral or written)	Written		Person Giving Report (if oral):	n/a
Telephone or e-mail Meeting?	n/a		Report File ref:	L:\General Information\ Workgroups\Policy\ Employment\Ministerial decisions\SD Trainee Rate cumulative 21Feb07
Written report – Title	MINIMUM WAGE - For the purpose of eligibility to pay the trainee rate, consider a request from an employer for the accreditation of cumulative periods of training, up to a total period of one year.
Written report – Author (name and job title)	Kate Morel, Policy Principal
Decision(s): The Minister rejected a request for accreditation of the method by which an employer wishes to provide training to employees; over a cumulative series of short term contracts, for a maximum total duration of one year.
Reason(s) for decision: The Minister considered a report prepared on the basis of evidence from an employer who employs trainees during the summer season. The “trainee rate” code of practice appears to be met by the employer as there is formal accreditation by a nationally recognised body for the training that employees undertake, the cost of training is covered by the employer and employees are paid for time spent training. One aspect of the code is not met due to the nature of the work; employees sometimes only work for a few weeks during the summer season, so do not have the opportunity to fully complete their training in that first period of employment. The code of practice provides that the trainee rate may paid for a maximum of one year when in a first job with a new employer, so the trainee rate could not be paid to an employee who continued their training whilst re-employed by the same employer in the following season. The Minister understood what the employer was trying to achieve, however was not satisfied that the policy should be amended to such an extent. The Minister did not support the request and re-affirmed the existing policy which is that the trainee rate should be paid for a maximum of one calendar year, not cumulative periods totalling one year, the policy intent being to minimise the possibility for abuse of the trainee rate. The UK and Isle of Man minimum wage systems also provide that the trainee rate may only be paid to an employee who starts a new job with a new employer, for a maximum period of six months.
Action required: To advise the employer of the Minister’s the decision, and provide appropriate assistance via the Department and JACS to ensure that the employer meets the requirements of the Law and the code of practice.
Signature: (Minister/ Assistant Minister)		Date of Decision: 23 February 2007

Minimum wage - trainee rate - request to accumulate periods of training

Ministerial Report

MINIMUM WAGE - For the purpose of eligibility to pay the trainee rate, consider a request from an employer for the accreditation of cumulative periods of training, up to a total period of one year

Summary

An employer who is a provider of sports activities and training wishes to apply for written accreditation of the manner in which training is provided to employees, for the purpose of paying of the trainee rate, rather than the full minimum wage.

Background

The Minister was provided with documents relevant to the application for accreditation, including information regarding the training and qualifications to be undertaken by trainees whilst working for that employer.

The employees work on a “zero hours contract” basis and may be asked to work during the period May to September. One week in July must be worked, other than which, hours are variable and as required, by mutual agreement. The training appears to meet a nationally recognised standard in that field, as required by the “Trainee Rate Code of Practice”. The code allows an employer to pay employees the trainee rate during the first year of a first contract with an employer.

Employees sometimes work only for a few weeks each year during the holidays as they are often university or college students and may not have the opportunity to complete the full training during their first contract of employment. The employer however wishes to re-employ the same employees the following year to continue their training for a maximum total training period of one year. The employer has therefore asked the Minister to consider whether short term periods of work may be treated cumulatively over a period of years for the purpose of the trainee rate.

Relevant legislation

The intention is that the statutory minimum wage should not become a barrier to the receipt of structured training or taking on an inexperienced employee. The trainee rate code of practice sets out criteria which limit the circumstances in which the trainee rate may be paid to meet the policy intent, which is to minimise the possibility for abuse of this lower rate and to ensure that the training provided by employers is genuine.

The Minimum Wage Regulations define a “trainee” as “an employee of any age who, by written agreement with his or her employer, is undergoing accredited training during the first year of his or her employment by that employer in the particular job for which the employee is being trained.”

The trainee rate code of practice provides that the trainee rate may only be paid to “employees over school leaving age who start a new job with a new employer". An employee must not be paid the trainee rate twice for the same training (either with the same employer or a different employer), and an employee may not be given the trainee rate twice by the same employer unless they are being trained for a substantially different job.

Employers are currently advised that the Regulations, as supported by the code, do not allow employees to be trained for a cumulative total of one year over a period of many years.

If approval were to given to this request for accreditation, there is concern that the principles could extend to “Saturday” staff who could then be paid the trainee rate for a cumulative total of one year, over a period of 7 years, leaving the rate open to abuse by unscrupulous employers.

Ministerial Decision

The Minister refused accreditation on the grounds that the request does not meet the policy as set out in the code of practice, which is to encourage employers to provide structured and genuine training for a maximum period of one calendar year in a new job with a new employer, and not cumulative periods of up to one year where the job and training continues from one year to the next.