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One in five apprentices not receiving mandatory minimum wage

21 Jul 2017 By Hayley Kirton

Government urged to take action so 'good companies aren't undermined by bad ones'

One in five (18 per cent) apprentices did not receive the mandatory national minimum wage (NMW) in 2016, as employers appear to be tripping over the pay rules.

At present, apprentices are entitled to at least £3.50 per hour if they are under 19, or over 19 but in the first year of their apprenticeship. After this, they qualify for the rate of NMW for their age group.

The survey of level 2 and 3 apprentices by the Department for Business, Energy and Industrial Strategy (BEIS) discovered that incidences of apprentices receiving less than the rate of NMW they are entitled to rose sharply from 13 per cent for those aged 16-18 or in the first year of their apprenticeship, to 32 per cent for those aged 19-20 in the second year of their apprenticeship.

Percentage of apprentices not receiving NMW - chart

“It is important that organisations pay the wage rates that they are legally obliged to and that those that employers deliberately flouting the law are prosecuted, so that good companies aren’t undermined by bad ones,” said Charles Cotton, performance and reward adviser at the CIPD. “However, we should recognise that genuine errors can arise when firms forget the hourly rate changes for those aged over 18 in their second year, so it is important that employer payroll software increases the minimum pay rates with age.”

Calling the findings “shocking”, Frances O’Grady, general secretary at the Trades Union Congress, said: “Workers at the start of their working life are entitled to be paid the NMW. Ministers must urgently find the employers responsible for breaking the law, name them publicly and prosecute them.”

The Association of Employment and Learning Providers’ chief executive, Mark Dawe, added: “There is absolutely no excuse for paying less than the legal minimum.”

Hairdressing apprentices were most likely to be underpaid the NMW, with 46 per cent reporting they received less than the legal wage for their toil in 2016. Management apprentices were most likely to receive at least the correct NMW, with just 7 per cent saying they had not. The total proportion of apprentices not being paid the correct rate has also inched up from 15 per cent in 2014, the last time the BEIS carried out the survey.

Apprentices not receiving NMW - chart

However, the researchers stressed that failure to pay the NMW might not be malicious – for example, the apprentices surveyed may have misremembered their pay or rounded it down, or they could have included unpaid overtime they undertook voluntarily.

The report found that, while apprentices were contracted on average to work 36 hours per week in 2016, the average number of hours they actually worked was 40.5. Two-thirds (65 per cent) of apprentices with set hours said they worked overtime.

More than a third (34 per cent) of the apprentices surveyed said they were not even aware of a minimum wage specifically for the training programme, although 95 per cent were aware of the NMW more generally.

Meanwhile, a separate poll by graduate careers service Prospects found that nearly half (48 per cent) of the 8,881 16 to 25-year-olds it surveyed had carried out an unpaid internship.  

“Graduates should not feel that working unpaid is a necessity for their career,” said Jayne Rowley, chief executive at Prospects. “If a job is worth doing, it is worth paying for.”

Despite the illegality, it is not unheard of for employers to pay staff less than the NMW. BEIS minister Margot James recently revealed that around 100,000 employees were underpaid by a total of £10.9m last year.

A government spokesperson said: “It is every employer’s responsibility to know the law and there is no excuse for paying apprentices less than minimum wage rates. The government is determined to ensure the UK’s lowest paid workers get what they are owed.”

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