6 December 2007
A new government report on volunteering and the national minimum wage could cost charities and claimants many thousands of pounds where childcare costs have been paid.
Charities may be liable to pay the minimum wage to volunteers who receive childcare costs and claimants may face repaying huge sums in benefits.
The Department for Business Enterprise and Regulatory Reform (BERR, formerly the Department for Trade and Industry) has published a report on the National Minimum Wage and Voluntary Workers following consultation with charities.
The report looked specifically at the issue of what payments could be made to volunteers without affecting their status. In spite of feedback from third sector organisations that the rules around what is a legitimate expense were not clear, BERR decided that the rules do not need changing, because:
"In general, it is clear what constitutes the reimbursement of expenses, and the grounds on which training, accommodation and subsistence may be provided as benefits in kind."
The report then went on to explain that:
"Training beyond the needs of the volunteering opportunity, or reimbursement of childcare expenses represent a significant benefit in kind and as such would change the nature of the relationship between voluntary worker and qualifying organisation."
In other words, where a charity pays a volunteer's childcare expenses whilst they are engaged in volunteering this will be regarded as a payment, not as an expense. The charity may then be liable to pay the minimum wage for all the hours the 'volunteer' has worked. Worse still, if the volunteer is a disabled claimant they may find that they have lost their entitlement to benefits such as incapacity benefit and income support because they have been engaged in remunerative work. They may then be faced with an overpayment of benefits running into many thousands of pounds.
Benefits and Work contacted the Minimum Wage Unit (MWU), which is the organisation responsible for ensuring compliance with the minimum wage. Initially, MWU claimed that volunteers aren't paid child care and thus the issue doesn't arise. We pointed out that, in fact, many voluntary organisations pay childcare to volunteers and that the National Council for Voluntary Organisations has been advising on its website and in publications for years that childcare is a legitimate expense for volunteers.
Some time later we were called back by a technical specialist at the MWU who confirmed that their position is that childcare costs are not a legitimate expense and that if a complaint was received in relation to any given individual they would investigate. Each case, they stressed, would be judged on its own merits.
This is a bewildering situation, given that the law relating to benefits states that expenses 'wholly and necessarily incurred' in connection with voluntary work can be paid and will not count as income. It is difficult to see how a volunteer with children can carry out voluntary work unless childcare is available: it is clearly an expense that only arises because of the voluntary work.
Only last year the DWP issued a memo to decision makers ruling that volunteers could not receive expenses to cover the cost of lunch without threatening their benefits. It took many months of angry lobbying by voluntary organisations to get that ruling withdrawn. Now a further attack on volunteers and volunteering has been launched by another government department within weeks of the introduction of private sector Pathways to Work going live. One of the options offered by many Pathways providers is support with volunteering as a first step towards paid employment.
In the face of yet another pointlessly counter-productive and potentially disastrous decision by a government department, many disabled claimants are likely to conclude that the only safe course of action in relation to returning to work is to do nothing.
A copy of the BERR report can be downloaded from this link.
© 2007 Steve Donnison