Concept for recruitment trial - key considerations

The difficulties of recruitment are well-publicised at the moment. However, it’s still something which takes significant time and you will naturally want to be comfortable that the individual you’re hiring is right for your organisation. This is where a pre-work trial could be beneficial.

That individual, too, might want to know a bit more about the job than they might glean from a standard interview process.

Probationary periods are very standard in lots of employment contracts but there are also arrangements out there through which prospective employees can complete a pre-work trial before you formally make them an offer. Or before they actually commit to working with you.

Key considerations for a pre-work trial

Such arrangements are particularly common in the hospitality sector. So what are the rules if you do adopt this ‘try before you buy’ arrangement?

Does the time count towards continuity of employment?

In law, a period of continuous employment “begins with the day on which the employee starts work”. Case law has found that this should be interpreted as meaning that this refers to the beginning of employment under the relevant contract of employment, not literally as to when the employee first undertook duties.

At the point an individual does a pre-work trial with you, it is unlikely that there will be no contract. There is no guarantee that the individual will even want to take up the role at this stage.

Nevertheless, the most risk-averse approach would be to count this date as day one of their employment with you. Even if there is a short gap between that one-day trial and when they formally start. This is particularly so if you are requiring them to attend and if they are paid (see further below on this point).

However, there is also an argument, depending on how the trial is intended to operate, that this should not be regarded as ‘work’ for your benefit and therefore should not be counted.

To support that argument, we would recommend that you make clear, when you invite someone for a work trial, that it is not an offer of employment and will not form part of their contract with you, if they are taken on.

Bear in mind that continuity of employment isn’t something you can contract out of or into, as it is dictated by statutory provisions.  But having that paper trail would assist in arguments around the particular facts and what was intended.

Note that if you decide not to treat a pre-work trial as part of continuous employment and you find that this then impacts further down the line on whether or not someone has two years’ employment or on how much notice they get, we would recommend you take specific advice on that particular situation.

Paying the National Minimum Wage

As a general principle, someone who performs work is entitled to be paid the National Minimum Wage (NMW) at their appropriate level. Unfortunately, although it is widely recognised that work trials are used, there is no definition in law of what a ‘trial work period’ is or to set out when NMW should be paid.

HMRC has issued guidance, which is not binding or determinative but intended to be useful to assist employers in identifying whether NMW should be paid.

It notes that an employer may ask a potential recruit to carry out tasks, without payment, to enable the employer to decide whether to offer them a job. Often such a ‘trial’ will be a legitimate practice. But the guidance notes that some employers may use unpaid trial work periods to obtain work or services for which at least the NMW should be paid.

Guidance for payment

Payment of the NMW will depend on the circumstances of the case and while there is no definite rule or tests for determining this question, the guidance suggests that the following are likely to be taken into account:

  • Whether the trial period is part of a genuine recruitment exercise;
  • Whether the length of the trial period exceeds that reasonably necessary to test an individual’s ability to carry out the job on offer. HMRC takes the view that an individual conducting work in a trial lasting longer than one day is likely to be entitled to the NMW/NLW in all but “very exceptional circumstances”. If you are looking at offering a pre-work trial, it may therefore be safest to limit it to a trial of a few hours;
  • The extent to which the individual is observed while carrying out the tasks. If there is no observation, that would suggest it isn’t a genuine trial of suitability;
  • The nature of the tasks carried out and how closely these relate to the job offered. It is suggested that where the tasks differ this may indicate that the employer is not genuinely looking to test the individual’s ability, but rather just to have the tasks carried out by someone;
  • Whether the tasks carried out have a value to the employer beyond testing the individual. Tasks carried out in a simulated, rather than a real environment, will normally indicate that they do not have a value beyond testing and that the individual is not ‘working’;
  • Whether the use of trial periods is important to the employer in running its business, aside from as part of a recruitment process. For example, where an employer is using trial periods to reduce labour costs this is likely to indicate that the individual is ‘working’.

The guidance gives a number of hypothetical examples (noting that the facts of real cases will be more complex), though ultimately it will be a case of looking at the precise detail of the arrangements, including the duration and also what the individual is being asked to do.

With that in mind, it would be best to exercise caution and make sure that what is done by the individual is not something which has substantive or substantial value to you rather than testing the individual’s ability.

If it does have that level of value, there is more chance of it being found that there is a contract under which the individual would be a worker entitled to the minimum wage.

When does the National Minimum Wage not apply?

However, in some cases an unpaid trial work period lasting a few hours may be reasonable and not create an entitlement to minimum wage. This is because the main purpose would likely be to test the individual, and what is done would probably have little or no other value to you: the substance of the arrangement would therefore concern recruitment rather than providing work under a contract.

The individual would therefore probably not be entitled to the minimum wage. That said, do bear in mind that a key consideration is that the longer a trial period continues, the more likely it is that it results in a contract to provide work and that the minimum wage becomes due.

How should we proceed if we want to offer a pre-work trial?

If offering pre-work trials is valuable for you in your recruitment process, make sure you are clear in your own minds about what the trial will look like, that this is set out in any offer made to the individual and that whoever is running the trial understands how it should operate.

Be comfortable that, if necessary, you could demonstrate to HMRC that this was genuinely to assess competency as part of recruitment, not an attempt to get free work.