Unpaid work trials: Legitimate recruitment practice or exploitation?

Most employers recognise that recruitment is far from an exact science. A candidate might interview well, but how do we know that they can fulfil the role? Alan Lewis, partner with Constantine Law, examines the grey area of work trials and their interpretation under national minimum wage rules.

Aside from the interview process and any other recruitment exercises employers ask them to complete, how can potential employees' abilities be gauged to deal with real workday issues that demonstrate they have skills required for the job? This is where work trials come in.

It is commonplace in some industries to require job applicants to undertake a work trial period during which the employer can assess their suitability for a role. Such a work trial may or may not lead to a job offer. The conundrum for employers is whether the candidate should be paid a wage during that trial period or required to carry out the trial for free. Furthermore, if the candidate is paid, does the national minimum wage apply?

During the past decade, it has not been uncommon for businesses, particularly in retail, hospitality and creative sectors, to use unpaid work trials as a means of getting free labour. The Federation of Small Businesses has said that unpaid shifts are a valuable part of the recruitment process, but should not cross the line into exploitation. Trade unions have condemned the practice.

There was an attempt to introduce specific legislation about work trials in 2018 in the form of a private members' bill submitted by Stewart McDonald, known as the Unpaid Trial Work Periods (Prohibition) Bill. It proposed three key changes to the law:

• the employer would have to inform the candidate how long the work trial would last; provide them with a job description outlining the qualities the candidate needed to demonstrate during the trial period; inform them how many jobs are available for those who can demonstrate the qualities necessary to be offered a contract of employment; agree to provide the candidate with feedback from the work trial period; and inform them what arrangements will be made for notifying the candidate of the outcome of the work trial;
• the employer would have to pay the candidate for work done during the trial period at a rate not less than the national minimum wage;
• a failure to pay the national minimum wage would be an offence under section 31(1) of the National Minimum Wage Act 1998.

The bill did not make its way onto the statute book and we are left with no specific legislative guidance about work trial periods.

As the lockdown following the Covid-19 pandemic eases in the UK and the impact of Brexit bites, we are seeing staff shortages in various industries and employers might be tempted to use unpaid work trial periods to help them bridge their resourcing challenges. They should tread with caution in doing so, for whilst it is not illegal for businesses to use unpaid trial shifts, they must be part of a genuine recruitment process and not extend beyond a few hours' work.

The government did release guidance in 2019 that is relevant -  "Calculating the minimum wage". This was republished in March and updated as recently as 4 August 2021. The guidance is not binding but is intended to help employers and candidates to identify circumstances when the national minimum wage applies. These guidelines say that:

• all workers are entitled to the national minimum wage, unless a specific exemption applies
• a worker is defined in the National Minimum Wage Act 1998, section 54(3) as a someone who has entered into or works under a contract of employment or any other contract by which the individual undertakes to perform work or services personally for someone else (unless the individual is working on a genuinely self-employed basis for a client or customer).

The guidance lists a number of factors that are likely to be taken into account when deciding whether or not the trial period should be paid. A key consideration is noted to be that the longer the trial period, the more likely it is that it results in a contract to provide work and that the NMW is payable. The trial period should be limited to what is reasonably necessary for the employer to assess the candidate's ability to do the job being offered. In all but exceptional circumstances, individuals working trial periods lasting more than one day are likely to be entitled to the NMW.

Other relevant factors are: the extent to which the individual is observed while carrying out the tasks; the nature of the tasks carried out and how closely these relate to the job on offer; and whether the tasks carried out have a value to the employer beyond testing the individual.

With HMRC stepping up its enquiries into failure to pay the NMW, businesses thinking of utilising unpaid work trial periods should proceed with caution if they are to avoid investigation, fines, penalties and risk been "named and shamed" in the lists published by HMRC.