According to the DTI, there are over 700,000 homeworkers in the UK. These employees must be paid the minimum wage for all hours worked.
Due to the nature of home working, however, employers may often have no control over the hours worked, or be aware of how long their employees were spending on the tasks. For this reason, current regulations enable employers and homeworkers to enter into a written agreement known as a "fair estimate agreement."
In such agreements, the employee sets a fair estimate of the hours needed to complete the task, so that the minimum wage can then be paid for the hours actually worked, up to the limit set in the estimate.
The estimate is not regarded to be fair if it is less than four-fifths of the time an average worker would take to do the same amount of work in the same conditions. If no fair estimate agreement is in place, the workers must be paid the minimum wage for all hours actually worked.
The DTI, however, claims that some homeworkers are still receiving pay rates below the minimum wage, or are being paid piece rates for their work, in breach of current legislation.
For these reasons, the DTI said it is planning to amend the National Minimum Wage regulations, so that employers will be required to pay all homeworkers either the minimum wage for all hours worked, or a "fair piece rate."
The fare piece rate proposal will make three changes to the fair estimate agreement system:
The National Group of Homeworkers welcomed the proposals, saying the new rules will "simplify the process and make it more difficult for employers to exploit homeworkers, who can at the moment legally pay homeworkers only four-fifths of the national minimum wage."
The proposed changes are outlined in a consultation document, which will soon be available on-line at www.dti.gov.uk/er/nmw
The consultation closes on 9th March, 2003.