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1 a Purposive Interpretation of the National Minimum Wage Act Guy Davidov* Abstract This Article Uses a Purposive Method of Inte

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1 a Purposive Interpretation of the National Minimum Wage Act Guy Davidov* Abstract This Article Uses a Purposive Method of Inte A Purposive Interpretation of the National Minimum Wage Act Guy Davidov ∗ Abstract This article uses a purposive method of interpretation to suggest solutions to various questions raised in the application of the National Minimum Wage Act (NMWA). The article first considers the goals of minimum wage laws (and the NMWA in particular) by putting forward the justifications for such laws and addressing critiques. It is argued that the minimum wage is best understood as a mechanism for redistribution of resources and ensuring respect for the human dignity of workers. Building on this articulation of goals, the article then proceeds to consider which group of workers are included within the scope of the NMWA (interpreting terms such as ‘worker’, ‘voluntary workers’, apprentices and trainees); what are considered as working hours for the purpose of the Act (focusing on cases of work/sleep combinations); and what constitutes part of the wage (focusing on tips, attendance allowances and deductions for accommodations). Introduction A decade has passed since the National Minimum Wage Act of 1998 (hereinafter NMWA) came into force, and during this time a number of difficult interpretive questions have been put before the courts, with crucial implications for the workers and employers involved. Who are the ‘workers’ included within the scope of the Act? And who are the ‘voluntary workers’ excluded from protection? Are workers entitled for a minimum wage with respect to hours of being ‘on call’? And are ‘tips’ paid by clients considered part of the ‘wage’ for minimum wage purposes? These are just some of the questions raised so far. This article offers a coherent approach for addressing such questions, based on a purposive construction – the idea that terms in legislation should be given a meaning that will best advance the goals of the legislation. While the purposive method of interpretation is usually associated with European law, the basic idea is similar to the English ‘mischief rule’, ie the understanding that laws should be interpreted in light of the mischief they seek to cure. 1 There are differences between the European and English approaches in terms of the willingness to offer interpretation that contradicts the literal meaning of a legislated term; but suggestions put forward below are limited to interpretations that are in accord with the words of the Act. In this respect the purposive approach does not appear to be controversial. There is growing agreement in recent years that a piece ∗ Faculty of Law, Hebrew University of Jerusalem ( [email protected] ). Many thanks to Einat Albin, Nicola Countouris, Simon Deakin, Daniel Gottlieb, Bruce Kaufman and participants at the Oxford Labour Law Discussion Group for helpful comments on an earlier draft. 1 See eg R v Secretary of State for the Environment, Ex Parte Spath Holme Limited , [2000] UKHL 61, [2001] 1 All ER 195 (opinion of Lord Nicholls). 1 of legislation should be interpreted in light of its purpose ,2 with many examples of courts and tribunals performing such interpretation in the labour law context. 3 Admittedly, there may be disagreement about the way such interpretation should be performed in practice. This article uses a particular form of purposive interpretation, which accords little weight to subjective intentions of Members of Parliament or the Government, instead putting emphasis on justifications that best explain the legislation and support it. 4 Statements of legislative intent could be useful, but only to the extent they provide normative justifications to support the legislation. The goal of this article is not to justify this method of interpretation but to use this existing (albeit controversial) purposive method for interpreting the NMWA. However, this exercise could also demonstrate the usefulness of such a purposive construction and therefore provide support for this method. The article begins by considering the goals of minimum wage laws, and the purposes of the UK Act in particular. After rejecting some common articulations on the purpose of minimum wage laws, it is argued that these laws are best understood as tools for redistributing resources and ensuring respect for human dignity. The article then proceeds to discuss the main interpretive questions raised by the Act, offering solutions that best advance the Act’s goals. First I consider which group of workers are included within the scope of the Act, by discussing the interpretation of the term ‘worker’ as well as the concept of ‘voluntary workers’ and the status of apprentices and trainees. I then move to discuss what are considered as working hours for the purpose of the NMWA, in particular by analyzing cases of work/sleep combinations and other ‘on call’ situations. Finally, the article turns to considers what constitutes part of a wage, focusing on the issue of tips and attendance allowances (the circumstances in which they are counted towards the minimum wage) and deductions for accommodations (the extent to which they are allowed). Throughout the article, some difficult scenarios from the case-law are analyzed as examples of the importance and usefulness of a purposive interpretation of the Act. The purpose of the National Minimum Wage Act The Low Pay Commission has been assigned an important role as a consultation body by the NMWA itself. 5 In its First Report the Commission listed a number of 2 See eg Jones v Secretary of State for Social Services [1972] 2 WLR 210, [1972] 1 All E.R. 145; R v Secretary of State for Health [2003] UKHL 13, [2003] 2 All ER 113. And see F.A.R. Bennion, Statutory Interpretation: A Code , 3 rd ed. (London: Butterworths, 1997) 731-733; J. Bell and G. Engle, Cross Statutory Interpretation (London: Butterworths, 1995) 56-58, 192-193; I. McLeod, ‘Literal and Purposive Techniques of Legislative Interpretation: Some European Community and English Common Law Perspectives’ (2004) 29 Brook. J. Int. L. 1109. 3 See eg Adi (UK) Limited v Firm Security Group Limited [2001] EWCA Civ 971, [2001] IRLR 542; Allonby v Accrington & Rossendale College [2001] EWCA Civ 529, [2001] ICR 1189; Bedfordshire Police v Liversidge [2002] EWCA Civ 894, [2002] ICR 1135; Relaxion Group Plc v Rhys-Harper [2003] UKHL 33, [2003] ICR 867, [2003] 4 All ER 1113; Metropolitan Police Service v Shoebridge [2004] UKEAT 0234_03_0806; Percy v Church of Scotland Board of National Mission [2005] UKHL 73, [2006] 2 WLR 353; Majrowski v Guy’s & St Thomas’s NHS Trust [2005] ICR 977, [2005] QB 848 (opinion of Scott Baker LJ); HM Revenue & Customs v Leisure Employment Services Ltd [2006] UKEAT 0106_06_2703. 4 See generally R. Dworkin, Law’s Empire (Harvard UP, 1986) 66-67, 313-317; H.M. Hart, Jr. & A.M. Sacks, The Legal Process: Basic Problems in the Making and Application of Law (Westbury, NY: Foundation Press, 1994) 1374, 1380; and especially A. Barak, Purposive Interpretation in Law (Princeton UP, 2005). 5 National Minimum Wage Act 1998, s. 5-8. 2 goals for the new Act. 6 The broad aim of the Act has been defined by the Commission as to ‘make a difference to the low paid while minimising burdens to business.’ 7 More specifically, the Commission considered the Act as intended to reduce inequalities of income among workers and minimize social exclusion; to create a greater incentive to work by rewarding work more highly (thus complementing the tax and state benefits systems); to remove ‘gross exploitation’; to prevent competition that focuses on low wages and creates a ‘downward spiral’ leading to low morale and low productivity, which is detrimental to both workers and businesses; to prevent the transfer of costs by some employers onto the benefits system, akin to taxpayers subsidizing wage exploitation and unfair competition; and to support a competitive economy, with greater development of workers’ skills (as opposed to competition focused on the lowest price of labour). 8 The Commission was also well aware of the possible implications of the minimum wage in terms of employment levels, and in particular the fact that the consequences might be more burdensome for specific types of employers and sectors, noting that this must be taken into account. It further emphasized the importance of allowing employers to maintain diverse pay systems. 9 This list of purposes is a good starting point for a purposive analysis of the NMWA. Nonetheless, for the most part, these purposes are not articulated at a level of generalisation which could assist the task of legislative interpretation. Just as it would be futile to describe the goal of the NMWA as ‘ensuring that each worker earns at least a minimum wage,’ it is equally useless for interpretation purposes to refer to terms such as ‘removing exploitation.’ While both descriptions may be correct, the former is too specific, and the latter too broad and vague. The challenge is to articulate the purposes of the Act at the level of concrete justifications – the Act could then be interpreted so as to best realize these justifications. It would be useful to take a global view of minimum wage laws first, because the NMWA is very similar in structure to other minimum wage laws around the world. This part relies on extensive academic discussions concerning minimum wage laws to articulate their general goals, before returning to the UK Act to assess the suitability of such global conclusions to the local context. Minimum wage laws: an overview and some possible purposes The first governments to experiment with modern minimum wage legislation, towards the end of the 19 th century, were New Zealand and Australia. 10 The experiments proved to be successful. The British Parliament, after a ‘careful study of the Australian systems,’ 11 passed a minimum wage law (though very limited in scope) in 1909. 12 At the end of World War I, when the International Labour Organization (ILO) was set up following the realization that ‘peace can be established only if it is 6 The National Minimum Wage: First Report by the Low Pay Commission (1998), at http://www.berr.gov.uk/files/file37987.pdf (last visited 23 Feb, 2009).
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