Co-Working Relationships, the Law and the Minimum Wage

“Filmmaker seeks actor to play lead. £80 offered for three days.”

Shown above is a summary example of something I often see when creatives are seeking to make a project happen. One person (I shall call her “Jenny”) is looking for someone else (I shall call him “Joe”) to perform a role on a project. As a sweetener, Jenny is offering some money to Joe. She’s offering all that she can reasonably afford but less than the national minimum wage.

In this kind of case, someone often pipes in with some version of “you can’t do that, it’s illegal”.

Firstly let me say that I am, in general, a strong proponent of the national minimum wage. I’m a passionate supporter of looking after our least well off and of sharing income and wealth far more equitably than we do at present. If it was up to me, I’d up the minimum wage. Better still, I’d introduce some form of basic income scheme (more on that below).

However, Cahootify’s founding vision is to help creative people make their projects happen. This is what I’m passionate about so whenever I see one person say to another “you can’t do that” it’s like a red rag to a bull for me.

I do want to stop profit-making corporations from exploiting their workers. I don’t want to stop Jenny from making her film, or Joe from joining in if he wants to. In particular, I don’t want to create the farcical situation in which Jenny is forced to pay Joe nothing when he’d obviously rather have the £80. (From the perspective of employment law, it’s OK to pay Joe nothing because that makes him a volunteer, whereas £80 for three days isn’t OK because it makes Joe an underpaid worker.)

The “you can’t do that” perspective comes from the assumption that Joe meets the legal definition of a “worker”. However, this is only one of four possible legal definitions for when one individual works with another – three of which involve the exchange of money.

I’m fairly certain that many people mistakenly assume that a scenario falls into the “worker” category, the one for which the minimum wage rule applies, when in fact it falls into one of the other categories. This assumption is usually influenced by information put out by workers’ unions such as Equity or BECTU – organisations that are only concerned with the employment category.

I’m not a legal professional, and the full legalities for each definition are very complex, so this must in no way be taken as legal advice but I have been thinking about and researching this for a while and as part of that research I have discussed the issue with legal professionals.

I’ll now do my best to roughly outline these definitions before returning to the “Jenny offers Joe £80” example to consider which of the definitions it fits, and to explain why I think it’s OK for Joe and Jenny to go right on ahead.

Possible Co-Working Definitions

Definition 1: The “worker” and the “employer”

This is the scenario we hear people refer to most often and the one to which employment law applies.

If Jenny employs Joe then she is bound by the various requirements of employment law, including that she must pay the national minimum wage.

A clear definition of a worker can be found here. The main points I’d like to draw your attention to for the purposes of this article are that for a person to be classed as a “worker”, that person must;

  1. receive a reward of money or a benefit in kind, for example the promise of a contract or future work.
  2. have to turn up for work even if they don’t want to. That is, there’s some kind of power imbalance and Jenny has the power.

Definition 2: The “volunteer” and the “beneficiary”

In this scenario, Jenny offers Joe a volunteering opportunity and Joe receives no money except perhaps expenses. Jenny is free to offer certain other benefits like training but risks tipping into employment territory if she pays Joe any money beyond expenses.

It’s assumed that Joe’s motivation is either charitable (i.e. to make the world a better place), self-development (i.e. to increase his own well-being or employment prospects) or simply enjoyment.

Note that the beneficiary doesn’t have to be a charity or community organisation though it usually is. That is, it’s not illegal to volunteer for a commercial organisation.

Definition 3: The “supplier” and the “client”

In this scenario, Joe is running a business and commits to a particular deliverable in return for a specified fee. For example a corporate video, a brand logo, a storyboard etc.

Joe doesn’t charge for time directly (even if it’s specified in his quote). It’s up to Joe to factor in how long he thinks it’s going to take him as just one of the considerations for his fee. Jenny is just paying for the result.

Joe is also free to invest in the project if he wishes and produce it for a minimal fee or for free. He might do this to build a relationship and hopefully win further work from the client, to learn a new piece of software, or to build his portfolio etc.

Definition 4: The “partner” and the “partner”

In this scenario, Jenny and Joe choose to work together, each for their own reasons. Neither individual is employing the other. If there is any income from the partnership then by default (i.e. without a modifying partnership agreement of some kind) it must be shared equally.

Strictly speaking, if the partnership is short-term to deliver a specific project, then it’s called a “venture partnership”. In creative circles people often refer to this as a “profit-share”.

Two Examples to Consider

Having looked at the different co-working definitions, let’s now look at two examples and consider which of the definitions they best fit. The second of these will be the “Jenny pays Joe £80” one that I kicked the article off with.

Example 1: The unpaid intern at Monster Media

Jenny is a manager at “Monster Media”, a successful commercial production company, and Joe takes a six-month unpaid internship. Joe knows that this is a very hard industry to break in to and that most of the juniors at Monster had to first work as interns.

Is this morally OK? In my opinion, no.

Is this legal? As I understand it, that depends on your interpretation of the employment clauses I outlined above, which are that Joe should only be classed as a worker if 1) he receives a reward of money and/or a benefit in kind, for example the promise of a contract or future work, or 2) he has to turn up for work even if he doesn’t want to.

If you think that Joe is just on an in-work training program and can walk away at any time with no negative consequences, then he’s a volunteer and all’s good.

If on the other hand, you think that his primary motivation is to gain future employment with Monster, and if Monster is exploiting that motivation, and if there’s an imbalance in the power relationship, and if he has a lot to lose by walking away, then he’s an underpaid worker and it’s illegal.

Example 2: Jenny pays Joe £80 to be in her film

This brings me back to the main subject of the article. To remind you: Jenny, an aspiring filmmaker, is offering Joe, an actor, £80 for three days to play the lead in her short film. Jenny is not of independent means – she’s probably a student at uni or a recent graduate. Joe wants to be in the film, partly for the experience and partly to be able to demonstrate his on-screen acting ability. The £80 is a nice bonus.

Is this morally OK? Come on, of course it is! My main beef with people who complain about something like this is that they’re being a bit of a jobsworth. They’re looking at the letter of the law rather than the specifics of the situation and the human beings in it. Do they really want to force Jenny to pay Joe nothing?

Also, however, it looks like in this case the law isn’t as much of an ass as it’s cracked up to be. (I.e. it’s not an ass crack. OK, sorry…)

I’m not sure quite how to classify Joe in this case but I think it’s clear that he’s not a “worker” and that this project doesn’t therefore fall under employment law with it’s minimum wage rule.

That’s because he doesn’t fit the “he has to turn up for work even he doesn’t want to” clause. There’s no power imbalance here. In fact, Jenny would be far more seriously impacted if Joe walked away from the project than Joe would be if Jenny did. Also, Joe’s primary motivation for doing this work is unlikely to be the £80. The £80 is a sweetener, not a wage.

I think that the definition this situation best fits is that of a venture partnership. Joe and Jenny are partners on the project. Jenny’s £80 is an investment in the project that, were the project to make any money, Jenny could reasonably take back out before equally distributing any further income. Of course, the project isn’t going to make any money anyway so the whole discussion is a bit silly…

Oh, for a Basic Income Scheme

Leaving the legals aside for a moment, one argument I do have a lot of sympathy with is that people shouldn’t work for less than the minimum wage because only the relatively well-off can afford to do this, so it unreasonably disadvantages everyone else.

I have two difficulties with this argument, however. The first is that it can be used as an excuse by people who actually do have the time and/or resources required. (For example, I’ve often seen people put more effort into funding applications than it would have taken to deliver the project they’re seeking funding for – making it more about status and validation than about practical delivery.)

The second is that it’s a kind of “race to the bottom”. I want as many people as possible with passion in their belly to be able to deliver the project they’re passionate about. I don’t think the answer here is to say to those people who already can do this; “because some of us can’t, you can’t either”. I want those who currently can’t to be given the opportunity to do so as well.

In relation to this, I’m a huge fan of some form of Basic Income Scheme whereby every citizen receives a generous basic income from the state regardless of their circumstances then, for those that pass a certain earnings threshold, this is returned to the state in tax.

With this arrangement:

  1. There’s no need for a minimum wage – it always pays to work.
  2. On the other hand, employers would be forced to raise the wages for really shitty jobs because people wouldn’t have to take them – this would naturally result in a lessening of income inequality.
  3. We can almost completely do away with the tedious, expensive and humiliating welfare state system.
  4. Almost everyone always has their basic needs met.
  5. Almost anyone with a project they’d like to try can give it a go. (At a guess, this would also result in a lessening of wealth inequality.)

Thank you for your attention. I hope this has given you some food for thought. Comments are particularly welcome from legal professionals working in this area.

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