Exclusive: NI Law Society tells firms they are free to take risks over minimum wage

Exclusive: NI Law Society tells firms they are free to take risks over minimum wage

The Law Society of Northern Ireland has told solicitor firms they are “free to arrive at their own view” on trainee solicitors’ entitlement to the national minimum wage while warning of the risks of disregarding its advice.

Irish Legal News first reported on discontent among senior lawyers after the Law Society told firms in September that they could potentially owe up to tens of thousands of pounds in back pay to trainee solicitors.

The issue relates to the practice of firms not paying trainee solicitors during the period they spend studying and sitting exams at the Institute of Professional Legal Studies (IPLS), which HRMC believes is in breach of minimum wage legislation.

The Law Society negotiated a six-month “grace period” with HMRC in the summer after obtaining a legal opinion on the matter from David Reade KC, a redacted copy of which was shared with principals for the first time earlier this month.

Jonathan McKeown, CEO of JMK Solicitors, has challenged the Law Society’s interpretation of Mr Reade’s opinion in correspondence which has been widely shared within Northern Ireland legal circles. The Law Society’s chief executive David A. Lavery CB yesterday responded in a letter which was copied to all principals and has been seen by ILN.

In the letter, Mr Lavery acknowledged that there is an “arguable case” that firms are not liable to pay the national minimum wage to their trainees for time spent at the Institute of Professional Legal Studies (IPLS) where there has been no variation of the standard terms of the indentures of apprenticeship.

However, he said Mr Reade’s opinion had highlighted “a counter argument” based on a decision of the English Employment Appeal Tribunal (EAT), “the scope of which is open to debate”.

Mr Lavery added: “Individual firms are, of course, free to arrive at their own view on this. Doubtless many firms will not have viewed a trainee’s time spent at the Institute as working time for which a trainee would have to be paid.

“Unfortunately, the legal position under the NMW regulations and case law is much less straightforward than this and, as counsel has explained, there is a possibility that a trainee’s time spent at the Institute will be construed as working time.

“This is the position HMRC are taking as regards trainee solicitors and, based on senior counsel’s advice, we are inclined to think it would be difficult to contest this. The burden, if HMRC is challenged on a notice of underpayment, is upon the training firm to show that HMRC is wrong in its view.”

He pointed out that firms which are unsuccessful in challenging a notice of underpayment could face “significantly increased” costs as a result of penalties and the increase in the minimum wage from April 2024, which will affect the calculation of arrears.

The latest development in the row comes ahead of the Law Society’s AGM beginning at 2pm today.

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