Some retail (for example in the charity sector) and many visitor attractions, rely on volunteer staff to help them keep to budgets and reduce costs.
While there is a general exemption from National Minimum Wage (NMW) legislation for volunteers, provided that they are engaged by a “charity, voluntary organisation, associated fund-raising body or statutory body”, this exemption only applies where the volunteer is not paid any monetary payments and only receives limited and specified expenses.
This can still cause practical difficulties, especially in respect of the second part of the exemption, that can result in the volunteer inadvertently being caught by the NMW legislation.
Sally Appleton, a partner at Saffery, highlights the main pitfalls:
Written agreements
“Often, organisations will have a written volunteer agreement in place, where volunteering is a regular occurrence, but care should be taken that this is not a legally binding contract. Terms such as ‘rights’ and ‘obligations’ should be avoided, as should disciplinary processes or other policies more closely associated with that of a contract of employment.”
Expenses
“Volunteers can be paid reasonable out-of-pocket expenses, but the organisation engaging them needs to ensure that they cover no more than the volunteer workers’ actual expenses for work done. For example, if a standard payment is made to all volunteers as a convenience to cover the cost of travel or subsistence, but a volunteer doesn’t incur such costs (eg they live nearby and walk to their place of work) then that payment will mean the volunteer exemption does not apply. Instead, they will be treated as a worker and the relevant NMW rate will apply.
“For this reason, standard day rates/scale rates for expenses should not be used for volunteers, however much this may simplify internal processes.”
Benefits
“It can be common for those engaging volunteers to be provided with vouchers as a gesture of goodwill to them. However, the provision of any benefit can mean the volunteer exemption does not apply. The value of the benefit (ie voucher) will not count towards their pay for NMW purposes. Therefore, there may be an underpayment of NMW for all hours worked.”
Other areas
“Where clothing and equipment such as overalls or uniforms are provided that are required for the volunteer’s role then this would not typically impact on NMW. It can also be possible for a volunteer to be provided with training where it directly relates to the volunteer role they are performing without creating a NMW issue.
“There are important differences between volunteering and unpaid work in the eyes of HMRC and those engaging one or the other need to be absolutely clear of the status of those who are being taken on.”
