HL Deb 20 July 1998 vol 592 cc633-53

6.27 p.m.

Consideration of amendments on Report resumed.

The Deputy Speaker (Lord Elton)

My Lords, before I call Amendment No. 6, I should advise your Lordships that if it is accepted, I shall be unable to call Amendment No. 7.

Baroness Miller of Hendon moved Amendment No. 6:

Page 2, line 34, leave out subsection (7).

The noble Baroness said: My Lords, I beg to move.

On Question, amendment agreed to.

[Amendment No. 7 not moved.]

Clause 3 [Exclusion of, and modifications for, certain classes of person]:

Baroness Miller of Hendon moved Amendment No. 8:

Page 3, line 4, leave out subsection (3).

The Deputy Speaker

My Lords, before continuing, I should tell your Lordships that if this amendment is accepted, I shall be unable to call Amendment No. 9.

Baroness Miller of Hendon

My Lords, I have spoken to this amendment with Amendment No. 1, which was agreed to.

On Question, amendment agreed to.

[Amendment No. 9 not moved.]

Clause 4 [Power to add to the persons to whom Section 3 applies]:

The Deputy Speaker

My Lords, before calling Amendment No. 10 I should tell your Lordships that if it is agreed, I shall be unable to call Amendment No. 11.

Baroness Miller of Hendon moved Amendment No. 10:

Page 3, line 18, leave out subsection (2).

The noble Baroness said: My Lords, I have already spoken to this amendment with Amendment No. 1.

On Question, amendment agreed to.

[Amendments Nos. 11 and 12 not moved.]

6.30 p.m.

Clause 8 [The Low Pay Commission]:

Lord Razzall moved Amendment No. 13:

Page 7, line 3, leave out ("may at any time appoint a") and insert ("shall, not more than 12 months after this Act comes into force, appoint a permanent, statutory").

The noble Lord said: My Lords, as I indicated earlier, the Liberal Democrats support the Government's major objective in the Bill. We have only two reservations. The first was enshrined in the vote on Amendment No. 1. We believe that the Government should leave themselves the flexibility to vary the national minimum wage, in particular to introduce regional variations if changing circumstances prove that to be necessary.

I listened carefully to what the Minister said in Committee. However, as regards our second and more fundamental difference with the Government, we believe that they should go further and establish permanent status for the Low Pay Commission. In doing so, the somewhat unseemly ping-pong between the press, the Government and their spin doctors over the establishment of the minimum wage, and whether the Treasury or the DTI had won, would be taken out of politics. We believe that the minimum wage is an essential reform and we support the Government. However, we believe that during the next round of discussions on uprating the minimum wage the Government should have in the Bill the serious and significant status of the commission. As regards Amendment No. 14, we believe that, the Low Pay Commission having been established, the Government should require it to produce a regular report updating its data and informing debate and opinion.

The experience of other countries—the United States is a good example of the point I make—is that, where steps have not been taken to establish a permanent structure for upgrading and examining the rate, there is an unseemly political row about what the revised figure should be. The experience of the first round has not been happy for the Government. I urge your Lordships to accept the amendments in order to ensure that in future that unseemly row does not occur. I beg to move.

Lord Fraser of Carmyllie

My Lords, we have considerable sympathy for the amendment and would like to discover the Government's present proposal. Press reports indicate a conflict of view as to whether the Low Pay Commission should be permanent or have only a limited life. At the previous stage I was unsuccessful in ascertaining whether the Government's intention is that it should be permanent. It would be helpful to understand their intentions and I should be grateful if the Minister could place them on record.

Lord Clinton-Davis

My Lords, I tried earlier, perhaps unsuccessfully, to do precisely that. If the argument needs reiteration, so be it. The Opposition and the Liberal Democrats have argued in another place and in this House that the Low Pay Commission should be permanent. Therefore, it is reasonable to ask the question posed by the noble and learned Lord, Lord Fraser of Carmyllie.

The Liberal Democrats, notwithstanding the aberration earlier today, have shown strong support for the Government's objective as regards the minimum wage. We see the commission having a continuing and important role to play and I will go into that in a little more detail in a moment. That will be important during the running-in period of the minimum wage and possibly in the longer term, too.

We intend that the commission should undertake two tasks. The first is to review the position of 21 year-olds. The rate for them is to be set in April 1999 at £3 an hour. We want the commission to review that in 1999 following the transitional rate being imposed at that level and then to provide a further report on whether, in the light of experience, it wishes to reconfirm its advice that 21 year-olds can safely be covered by the main adult rate. That is an important and useful role and we shall await with interest its conclusions formed in the light of experience.

As I said earlier, we are also asking the commission to continue its work on monitoring and evaluating the introduction and impact of the national minimum wage. That is an important role for the commission, too, because this is the first time this country will have had a national minimum wage and we need to have a reliable assessment of its effects.

However, I do not believe that the amendment, which would require the Government to appoint a permanent body, is necessary. The commission can be required as appropriate to add to its expertise in the whole developing area. The Bill already allows the Government to call on the commission in this direction under Clause 8(9). I hope therefore that the noble Lord will examine further what I have said in that context. We provide the necessary way ahead to ensure that the commission can contribute as necessary and I hope that he will not press the amendment to a Division.

Amendment No. 14 prescribes particular issues which the commission must cover in its annual report. However, it does not limit the commission to looking only at those issues. We say that the amendment is somewhat overly prescriptive and too open ended. I would not disagree with the noble Lord in the way in which he wishes an examination and an assessment to be made in some of the important areas which need to be reviewed—for example, different sizes of business, different areas, gender, race and so on. However, I do not believe that we need to spell it out on the face of the Bill in the way that the noble Lord seeks to do. What the LPC is already required to do is to look at economic and competitiveness factors in making its recommendations.

Under Clause 7(5)(b) the Government may in fact establish other factors which the commission should consider. As I said, we want the commission to continue monitoring and researching the impact of the minimum wage; indeed, that is a perfectly reasonable thing to do. It is also a sensible way in which we can look forward to a reassessment of the position. I believe that the noble Lord also spoke to Amendment No. 63—

Lord Razzall

My Lords, I should point out to the Minister that it was the original intention that Amendment No. 63 should be included in the grouping, but that is no longer the case.

Lord Clinton-Davis

My Lords, I apologise and thank the noble Lord for that information. I hope, therefore, that the noble Lord will feel that our approach to the important issue that he raised is positive and that he will not find it necessary to test the opinion of the House. However, if he does so decide, that is a matter for him.

Lord Razzall

My Lords, I thank the Minister for that response. The relevant clause on which the issue turns is Clause 8(9) to which the noble Lord referred. That subsection says: The Secretary of State may at any time appoint a body … to discharge the functions conferred or imposed on the Low Pay Commission under this Act". As the Bill has crawled its way through the other place and also through the various stages in this Chamber, I believe I detect that the Government are getting ever closer to actually confirming that they do intend to appoint such a body. Indeed, if between now and Third Reading the Government could go just that extra mile or, indeed, that extra centimetre and so confirm, it would, as the Minister said, completely take the heat if not the sails—and that may be a mixed, strangulated metaphor—out of our amendment. I certainly do not wish to press the two amendments at this stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 14 not moved.]

6.45 p.m.

Clause 9 [Duty of employers to keep records]:

Baroness Miller of Hendon moved Amendment No. 15:

Page 7, line 30, at end insert—

("(1A) Records kept by an employer in relation to any worker for income tax or national insurance purposes shall be deemed to satisfy in relation to such worker any requirement as to records of remuneration paid as may be provided for in accordance with subsection (1)(a) above, save for details of the number of hours worked and any benefits in kind or other items having a monetary value which in accordance with the directions of the Low Pay Commission are to be taken into account in calculating the worker's gross pay, of which employers shall keep an adequate separate record.

(1B) In subsection (1A) above, "income tax or national insurance purposes" means the purposes of compliance with—

  1. (a) section 15 of the Taxes Management Act 1970,
  2. (b) section 203(2)(b) of the Income and Corporation Taxes Act 1988,
  3. (c) paragraph 8 of Schedule 1 to the Social Security Contributions and Benefits Act 1992,
  4. (d) any regulations for the time being in force made under any of the above Acts, or
  5. (e) any statutory re-enactment or modification of any of the above Acts or regulations.").

The noble Baroness said: My Lords, in moving the above amendment, I shall speak also to Amendment No. 16. When I moved the same two amendments in Committee, I truly believed that I was proposing a constructive improvement to the Bill. The amendments would not affect in the slightest degree what the Government claim are the objects of the exercise. The amendments would not reduce in the slightest degree the right that the Government propose that employees should enjoy, nor would they reduce the obligations on an employer to maintain accessible records that would provide employees with all the information that they need to check that they are receiving the minimum wage.

What I proposed in Committee—and again propose now—is the blindingly obvious suggestion that the various records that the employer is already obliged to maintain for the purposes of PAYE and national insurance, coupled in due course with the records required to comply with the European Community's Working Time Directive, should also be sufficient for the purposes of this Act.

What a helpful suggestion that was! It would reduce the amount of paperwork required to be done by very small firms without the ability to handle more than a minimal amount of clerical work and bookkeeping. The records would be in a form which would be easily understood, especially after the Secretary of State made regulations under Clause 12 about the information to be included in their pay packets. The accuracy of the records themselves would be guaranteed under the sanction of severe financial and criminal penalties provided by the taxation and social security legislation—sanctions far more severe than those proposed under this Bill. Using the PAYE, the national insurance and the working time records would enable those responsible for enforcement to check compliance by referring to documents in a form with which they would already be familiar. How prophetical that last point has proved to be, as your Lordships will see shortly.

So what happened to my totally non-political reasonable, helpful and entirely practical suggestion? The noble and learned Lord the Solicitor-General shot it down in flames in a speech that was half as long again as the one that I had made. The noble and learned Lord conceded my point about what he called, an entirely laudable aim … to avoid undesirable duplication in the records kept by the employer".—[Official Report, 15/6/98; col. 1382.] He said that that was an aim that the Government unquestionably shared. So why do the Government not accept the amendment? The Minister said that it was because they had made a commitment to consult on the draft regulations before bringing them to the House.

I am really trying to avoid making political points in this very non-partisan amendment. So I will not say that I wish I did not have this nagging feeling that the Government will simply go through the motions of consulting, and then use their rather large majority in the other place to do exactly what they intended to do in the first place. I see the noble and learned Lord is looking surprised; but I am not a bit surprised. However, I shall be interested to know what better and improved types and form and format of records the Secretary of State has in mind. Surely she must already have some idea.

On the last occasion that these amendments were debated at col. 1385 of Hansard, the Minister said: I cannot tell the Committee at this point exactly what type of records we shall be requiring". In the month that has gone by since that speech was made, can the Minister say whether the Secretary of State has even begun to formulate the most sketchy of ideas? If so, perhaps the House could now be informed as to what they are. I should also be interested to know how the Secretary of State believes that it will be helpful to employers and employees—and to those who are responsible for enforcement—to require a different form of records or the same form of records written on a second piece of paper.

In any event, despite what I thought was the reasonableness of my suggestion, the Government rejected my amendment; as, indeed, they have done with every one of the 108 amendments that bore my name up until today. But luckily I am made of sufficiently stern stuff to take such rebuffs with total equanimity. Therefore, I decided to let the Government stew in their own juice over the matter. If the Secretary of State was bent on empire-building, with more inspectors and enforcement officers, then perhaps the silver cloud was that it could provide employment for the many people who will be forced out of their present jobs, or who will fail to get jobs, as a result of the adverse effects of this misconceived piece of legislation.

However, something then happened: the report of the Low Pay Commission was published. What did it recommend? This is where the prophecy to which I referred earlier comes in. The commission enthusiastically endorsed the idea of the Contributions Agency, soon to be combined with the Inland Revenue, to be responsible for overseeing compliance and to be responsible for enforcement. It spoke in glowing terms of the expertise of the agency in such matters.

I assume that the noble and learned Lord the Solicitor-General was as much in the dark as I was on 15th June about what the commission would recommend. He did not know—indeed, he could not have known—that my proposal would fit in precisely with the recommendation about the enforcement authority. If he had known that, he would undoubtedly have agreed that it would be ludicrous to have the officials of one department using a different set and form of records to perform its duties under this Act from those which it is accustomed to using.

Can the Minister tell us whether the Government are going to accept the commission's recommendation on the enforcement agency? If not, perhaps he can tell us why not. However, if the answer is yes, what is the continued objection to this amendment? I look forward with much pleasure to hearing the Minister telling us just for once that he will say "yes" instead of "no". I beg to move.

The Solicitor-General (Lord Falconer of Thoroton)

My Lords, as the noble Baroness has accurately pointed out, this matter was discussed in some depth in Committee. I made the mistake of believing that in the course of the Committee stage, I had explained the reasons for not accepting Amendments Nos. 15 and 16. At the time, I accepted that they were proposed in good faith in an attempt to try to improve and assist the enforcement of the Bill. There is much common ground between us on this matter but there are real practical problems in what the noble Baroness suggests.

I think we are all agreed on the importance of record-keeping to the success of the Bill. Without adequate records, it will not be possible to enforce the law. The worker needs to be able to see what he is being paid and the employer needs to have records in order to defend himself in case he is accused of underpaying. It is therefore in the interests of all that adequate records are available. In her Amendment No. 15, the noble Baroness proposes to limit the Secretary of State's flexibility to decide the form and content of the records by tying them to the kinds of records already required for income tax or national insurance purposes. That is driven by a perfectly understandable desire to prevent unnecessary duplication. I referred to that in the speech I made in Committee.

This Government understand and agree with the motive of avoiding duplication. We have no wish to impose unnecessary burdens on business. We have said that clearly on a number of occasions, in particular in the Regulatory Appraisal where we pointed out that most wage details will already be kept for tax purposes, which is one of the points the noble Baroness has made. I remind the House once again of what was stated in that document, It is in employers' own interests to know how much they are paying their staff. Therefore, it is reasonable to expect that employers will already have records for the calculation of total pay that will be sufficient to calculate pay as it relates to the NMW. They will already have such records available for inspection by the Inland Revenue and Contributions Agency". That is very much in line with what the noble Baroness said.

However, the Regulatory Appraisal went on to note that there will be differences in the kinds of records to be kept, not least as regards the number of hours worked and any non-monetary payments which may be allowed to count towards the hourly minimum wage rate. Amendment No. 15 acknowledges that fact which is why it expressly allows for different requirements to be added.

It is clear from what I have said that in relation to the principle, the need for good records and the desire not to place unnecessary burdens on business, the noble Baroness and I are in agreement. However, the Government do not believe there is any necessity to make any changes to the face of the Bill. The issues raised in the amendment go to the detail of which records should be kept, and, in the Government's view, are best dealt with in the regulations. As this amendment accepts, income tax contributions do not by themselves provide adequate records. Clause 9 as at present drafted is left wide precisely because we want to identify how best to fit in with existing legislative requirements in this area.

As the House knows, the Government are committed to consulting on the regulations in draft form before bringing them to the House. There will therefore be an opportunity for businesses and individuals to make representations on the record-keeping regulations. I thank the noble Baroness again for drawing to my attention, in the retabled amendment, the various related statutes covering record-keeping for tax and national insurance purposes. That is of great assistance in determining how best to move forward in relation to the regulations.

While the noble Baroness may be right that tax and national insurance records will suffice in some cases, we cannot be sure of that. I think it would be unwise for the Government to tie their hands in the way proposed by the amendment ahead of consultation. I think it is right that we do not jump to conclusions in primary legislation. However, as I have indicated, I recognise a number of the valuable points which the noble Baroness has made. I hope therefore that I have on this occasion explained sufficiently clearly—unlike on the previous occasion—why we do not think that income tax and national insurance provide the way forward. There is something to build on there but whether it is the appropriate course will depend to some extent on the regulations.

I shall now discuss Amendment No. 16. I have absolutely no doubt that it is proposed in a desire to help rather than to hinder the Bill. Amendment No. 16 would again limit on the face of the Bill the Secretary of State's flexibility to decide the form and manner of records to be kept in respect of hours worked for minimum wage purposes, this time by tying them to records of hours worked which may be kept for the purposes of showing compliance with the working time directive.

I hope that noble Lords will welcome both these initiatives—that is, the minimum wage and the working time directive—as a sign of this Government's commitment to improving the lot of workers who are obliged to work for too long and/or for too little. These are basic matters of social justice and fairness. It is much to the credit of this Government that we are proceeding apace with making them part of domestic legislation. I do not believe that it makes sense to prescribe on the face of the Bill what kind of records should or should not be required to be kept. That would in my view be too limiting an approach and too premature.

As I have already made clear, we intend to consult on draft regulations. That consultation will inevitably involve identifying the various existing record-keeping requirements. As regards records of working time, I should make it clear—as I thought I had done on the previous occasion—that the draft working time regulations, on which we have just completed a further consultation, contain a general record-keeping requirement on all employers. Employers simply need to show that the time limit of 48 hours is being complied with. They are not necessarily obliged to keep records of working time as a means of proof. For example, it might be sufficient to show simply a list of workers who regularly work no more than the 48 hours. Therefore there is no general requirement on all employers to keep records of hours worked. On this ground alone the amendment could be unsuitable because, as is clear from what I have just said, one could keep records for the working time directive but that would not indicate how many hours individuals had worked. I should have thought that hits amidships, as it were, the basic purpose of this amendment.

There is a more specific record-keeping requirement in the draft working time regulations which requires employers to keep records of hours worked, but this applies only to those employers with employees who have opted to work longer than the 48 hour limit. Therefore it would not cover everyone who is covered by the national minimum wage. Again that does not help to meet the requirements of the national minimum wage. I therefore have considerable doubts as to the suitability of this amendment in the context of the minimum wage. However, I take the general point, at which perhaps the amendments are aimed; namely, that the minimum wage records will almost certainly need to cover hours worked—however this may be defined—and there may be scope for avoiding duplication with other possibly similar records.

We shall certainly look at these issues in the context of our forthcoming consultation on the minimum wage regulations. Your Lordships will have an opportunity to debate the matter further when we lay those draft regulations before the House. I argue that the matters raised by the amendment are detailed issues on which we should not second guess the views of those who will be affected, principally business, but also workers. We shall canvass their views and then make any changes accordingly. I suggest this indicates that we should not amend the Bill but rather should leave such matters to the consultation and the regulations. Therefore I respectfully suggest to the noble Baroness—despite the fact that we agree on many of the basic principles relating to this amendment—that she withdraw Amendment No. 15 and not move Amendment No. 16.

Baroness Miller of Hendon

My Lords, I thank the Minister for that detailed and helpful reply. I certainly do not wish to pursue matters much further. I am quite sure he is right when he says that there will be much discussion on the proposed regulations. However, given that the Government have already decided that benefits in kind will be excluded, I am not sure how much detail will be necessary in the regulations if the noble and learned Lord is suggesting that there may be some way of working out hours that are worked. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

7 p.m.

[Amendment No. 16 not moved.]

Clause 10 [Worker's right of access to records]:

Baroness Miller of Hendon moved Amendment No. 17:

Page 7, line 31, leave out subsection (1) and insert— ("(1) Subject to the provisions of this section, a worker shall be entitled, on written request, to be supplied by his employer with a copy of any relevant records within twenty-eight days of receipt by the employer of that request.").

The noble Baroness said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 18 to 23, 25 and 26, and 27 and 28, which are all consequential on the passing of Amendment No. 17.

We spent no fewer than 45 minutes on this amendment in Committee. I then withdrew it to give further thought to the remarks of the noble and learned Lord the Solicitor-General in opposing it. I told him then that I was not satisfied with his answer and, after further and most anxious reflection, I feel that I have no alternative but to bring it back for your Lordships' further consideration.

It is no exaggeration to say that this clause raises an issue of fundamental constitutional importance tucked away in the administrative details that it contains. Clause 10 deals with the employee's right of access to records of the pay he has received, hours worked and any other factors relevant to the question of whether he has received the full national minimum wage to which he is entitled. Let me say at once and unequivocally that we fully support the right of the employee to receive that information. Initially he will receive it from the detailed information that the employer will be obliged to provide in compliance with the regulations that will be made by the Secretary of State under Clause 12. More than that, we support the employee's right, if necessary, to verify that information from the employer's own records.

So where is the difference between us and the Government? It lies in the method by which it is proposed that the employee should obtain the employer's records. We believe that for some reason the Government have taken a gigantic hammer to crack a small and very commonplace nut.

The regime that the Government seek to put in place is one which we believe is totally and unnecessarily heavy-handed. So far as I can ascertain, it is entirely without precedent. But worse than that, in a country which revels in the fact that it has no written constitution, we believe that this provision offends against the safeguards and protection that has been accorded by the common law for centuries.

Clause 10(5) provides that the employee may serve the employer with what is termed a "production notice", requesting the production of relevant records. That in itself is not objectionable. However, the consequences provided for by the Bill are.

In subsection (8) the employee then has the right, after notice, to enter the employer's premises or some other place to inspect the records. It may be asked: what is wrong with that? It may very well be that an employer may not want to be confronted by, or to meet, his employee—or more likely, his ex-employee, with whom he is presumably in dispute.

It seemed from his intervention during my remarks in Committee that the noble and learned Lord was unaware of that extreme power. But the matter does not rest there. Subsection (4) gives the worker the right to be accompanied, by such other person as the worker may think fit". Whatever the reason is for that provision, it clearly opens the door to the possible intimidation of the employer. I grant that that could not have been the Government's intention. However, it would be the height of naïvety to suggest that it may never happen. I wonder whether the Government want to take the moral responsibility for that, as frequently as it may occur, especially as the presence of the "minder" to accompany the employee is no more necessary than the need for a worker to go onto an employer's premises or force the employer to nominate some other meeting place.

Why does the employee have to go anywhere to inspect the records? Why does the Bill not provide, as does the amendment, that the employee shall be entitled to receive a copy of the relevant documents, sent to any place or any person on his behalf that the employee nominates?

As I pointed out in Committee, if I require to see records relating to me in someone's computer, if I require to see my medical records, or if I desire to see the records of shareholders held on the register of a limited company, I do not have the right to go onto the premises of the person holding the records. I have to send in a written request and, within a prescribed time, the record holder is obliged to send me a full copy. If I am involved in civil litigation and I require to see documents held by the other party, I first need a court order, which is usually granted automatically as part of a set pre-trial procedure. After that, inspection takes place in the office of either of the solicitors to the parties. There are circumstances when even in civil litigation a party can obtain a peremptory court order to go onto another person's premises. It is known as an Anton Piller order, as I mentioned in Committee. It is hedged around with very strict conditions, including the presence of an independent solicitor to protect the interests of the occupier of the premises.

There is absolutely no need for an employee to have the right personally, with or without the assistance of someone else, to go onto the employer's premises. If the other person is required to assist the employee to read and understand the records, that can be done at the employee's leisure at a time and place of the employee's choice so long as what he is looking at are copies of the records. Such copies are supplied in vast quantities on frequent occasions in the course of civil litigation—which disputes and claims under the Bill will essentially be. There is absolutely no justification or need for the employee, on the strength of what can properly be called a home-made search warrant, to enter the premises of the employer to confront him, possibly accompanied by a total stranger. What if the employer is a woman and the employee and the accompanying person are both men? An Anton Piller order requires one to be present at the time the order is executed. Where is the similar protection in subsection (4)(b)? None of those problems arises if the normal procedure for supplying copies of records is followed.

I wish to examine the arguments advanced by the Government against the amendment that I moved in Committee. It is necessary to do so phrase by phrase. The Solicitor-General said: I think we would … all agree that it would be quite inappropriate for the employee to have a right to go into the employer's premises and look around in relation to particular records". But that is exactly what subsection (8) provides. The place at which the relevant records are produced must be either, as stated in sub-paragraph (a), the worker's place of work, or, to paraphrase sub-paragraphs (b) and (c), another reasonable place or one to which the parties agree.

So if the employer cannot provide some other place and the parties cannot agree on one, then it has to be the employer's premises. The noble and learned Lord the Solicitor-General shakes his head in disagreement. Undoubtedly, he will reply in detail as to why that is. But that is how the provision appears in common English. I cannot see any reason why the noble and learned Lord shakes his head. The problem would not arise if the records could be supplied as copies or photocopies.

The Minister complained that the only remedy open to an employee is to take the matter to an employment tribunal, which can inflict a monetary penalty under Clause 11. How is that relevant to the matter that we were discussing in Clause 10? The penalty for refusing access to records has no relevance to the way in which the records should be provided.

The Minister argued that the presence of a third party was necessary, who, might help explain to him what the records mean". I have already pointed out that the employer's adviser can do that just as easily by going through the copy records at a citizens advice bureau or trade union office or even the employee's own home, and can take as long as he likes to do so.

The Minister justified the presence of someone accompanying the employee by saying: I believe this is an important entitlement which will encourage workers to exercise their rights and discourage some employers who may be tempted to use unfair tactics of dissuasion". "Discourage some employers"? To me, that sounds like intimidation. It sounds as though the Government see the person accompanying the employee as more of a bodyguard than an accountancy adviser; otherwise, why would bringing him in discourage the employer from behaving in any particular way, as the noble and learned Lord the Solicitor-General said to me in Committee?

The problem envisaged by the Minister will not arise if the process is handled at long distance by the employee demanding and receiving copy documents as I suggest. The Bill does not even provide for the length of any proposed personal inspection. Can the employee conduct a gigantic filibuster and keep his employer hanging around for hours?

After describing my approach as fallacious, the noble and learned Lord the Solicitor-General said: A production notice can be given. That requires the employer to do certain things including providing certain documents". I believe it is the Minister's argument that is fallacious. The Bill does not require the employer to provide documents; that is what I say should happen. Clause 10(1)(a) of the Bill says that he should produce the documents and allow the employee to inspect and copy them himself. At column 1401 the noble and learned Lord the Solicitor-General said: I believe that it is essential to the enforcement provisions for a worker to have the right to inspect records". We have no argument on that point. But he went on to say: Of course, in many cases, that right will be met by the employer providing the worker with a copy of the records as they relate to him. I imagine that will in fact be the normal way to proceed". I thank the Minister for that remark because that is precisely the procedure which the amendment calls for and which the Government have been resisting, the procedure that the noble and learned Lord the Solicitor-General says would be the normal one. However, two paragraphs later, contradicting himself in a U-turn that must be a record even for the Labour Party, he said: the replacement of the right of access with a right to a copy of records would, in my view, unacceptably weaken the enforcement provisions of the Bill". Why and how? On the contrary, it would strengthen them.

First, the Bill provides only for the employee to make copies of the records himself. How will he do that? Will he cart his own photocopier or computer printer into the employer's premises, or will he rely on the employer to loan him his own equipment and stationery and let him use his electricity supply simply to expedite his departure from his shop or office? Suppose the employer does not have any such equipment? Many small corner shops, hairdressers, flower shops, and so on, do not. The worker will then have to copy the records by hand, with all the opportunities that that presents for clerical errors. For example, an employee is paid £220, but he writes down "£202". Even an employer without a photocopier will be able to find somewhere from which to borrow one or go to a local copy shop. He is certainly not obliged to allow the worker to take the records away, and he would be most unwise to do so.

What reason did the noble and learned Lord the Solicitor-General give for his abrupt change of mind? He trotted out the mythical unscrupulous employer yet again. He said: it is a regrettable fact that some employers may fail to provide the right records or may wish to conceal relevant records". Under subsection (9) the employer has 14 days to produce these records, plenty of time for the employer, if he so wished, to remove or conceal anything he wants to. Even the search warrant that the worker is allowed to issue under subsection (5) does not give the worker the right to ransack the employer's premises to look for the documents. The Minister himself admitted that that would be quite inappropriate. Is it suggested that the mythical unscrupulous employer will doctor his records, risking a lengthy prison sentence for forgery? There is absolutely no advantage, from the enforcement point of view, for there to be physical inspection, but the amendment prevents harassment or embarrassment of the employer by having the employee and his minder intruding on his premises.

There we have it. We both agree that an employee should have the right to check the employer's records and to supplement the data that the employer will have to supply under Section 12. There is no argument between us. The only difference is the question of how and where. "How" should be by the method which is normal in any similar situation of a civil dispute: by the provision of copy documents, which, as the noble and learned Lord the Solicitor-General himself admitted, he imagined, will … be the normal way to proceed".

The answer to the question of where the records should be inspected is that it should be at whatever address the employee asked for the records to be posted to.

I beg the pardon of the noble and learned Lord the Solicitor-General if he finds it embarrassing that I keep quoting from the things that he quoted to me earlier. I read them with the most enormous care. The noble and learned Lord said, at the foot of column 1402: the amendments are, with the greatest respect, based on a fundamental misunderstanding of the position, which is that it gave the employee the right to walk into the premises".—[Official Report, 15/6/98; cols. 1400–02.] Perhaps I may say, with even greater respect, that it was the Minister who was labouring under a fundamental misunderstanding. Now that he has had a whole month in which to re-read subsection (8), I trust that he will agree to accept the amendment, which does nothing to diminish the right that we both agree the employee should have to see records but does not infringe the employer's fundamental constitutional right not to have his premises invaded against his will by his employee and a total stranger.

Amendment No. 28 to Clause 11 is consequential to the main amendment. As we propose that the employee shall receive the records by means of copy documents rather than by direct access to the employer's premises, it naturally follows that an offence of failing to supply a copy of the records has to be substituted for the offence of failing to give physical access to them. I beg to move.

7.15 p.m.

Viscount Thurso

My Lords, I rise to speak to Amendment No. 24 in this grouping, which stands in my name and that of my noble friends. When I rose to speak to a similar amendment at Committee stage, it was following the same argument that the noble Baroness has just put forward. I said then that I did not feel that I could agree with her and that, as an employer, I did not feel that there was a particular problem. Having listened to the argument again, I have exactly the same feeling. Therefore, with regard to those amendments, we shall support the Government and thus normal service is now resumed.

The effect of my amendment as it stands would be to add to subsection (9) of Clause 10 a third option: that the notice could be produced, during the paid contractual working hours of the employee". I must again apologise, as I did at Committee stage. I have spotted that there is a drafting error and that the amendment does not achieve what I wish it to achieve. The amendment should be drafted so as to place in subsection (9)(a) after "notice" the words that are printed on the Marshalled List. It would thus read: The relevant records must be produced—

  1. (a) before the end of the period of fourteen days following the date of receipt of the production notice and during the paid contractual working hours of the employee; or
  2. (b) at such later time".
This has a quite different effect from the amendment as currently drafted. As I gave notice of that mistake to the noble and learned Lord, I hope that he will allow me to speak to the amendment as it should have been drafted rather than as it is drafted.

The amendment seeks to put a further obligation on the employer in respect of the production notice. It has effect only for employees who are working at night, in that the vast majority of employees work during the day and consequently the obligation for the employer to produce the notice at the time the employee is working will cause no hardship to the employer and will have no effect on the employee. However, for those who work night shifts, such as night porters in the catering industry and night security guards, it means that the employee can oblige the employer to make the production of the records during his or her contracted hours. It can be argued that that places a further and more difficult burden on the employer. I would rather argue the opposite case: that not to do so is to place an unreasonable burden on the employee.

At Committee stage the noble and learned Lord said that he was sympathetic to the principles underlying the amendment. He went on to say, however: as an employer, the noble Viscount might be a little irritated if a person in his personnel office had to wait until three o'clock in the morning just to give someone like a night porter his records".— [Official Report, 15/6/98; col. 1407.] I took that point. However, most shift workers begin at 10 or 11 at night and end at six or seven in the morning. Those are times at which—certainly in the hotel industry and I suspect in most other industries—there is someone on duty of a sufficient stature, be it a supervisor or a manager, who can be briefed by the personnel department and would be able to take the employee through the records. I do not believe therefore that it places too much of a burden on the employer.

Why then is it a burden on the employee to come in outside his contractual hours? There are two main reasons. The first is a simple one. If the employee works in the country, lives 40 minutes away and comes in using his own transport, then that employee is obliged to come to work at his own cost, using his own petrol or whatever it might be, at a time when he would not normally be at work. The exercise of his right therefore involves a cost and, as we know, cost for people who are on a minimum wage means a barrier.

The second reason is that it obliges the employee to come in and go through the records in his free time—either during those precious hours of daylight when he wants to sleep or, indeed, on a day off. It is a little hard and somewhat unreasonable to insist that an employee should come in to see the employer while the employee is on a well-earned break or a day off.

In effect, not allowing the employee to attend in his contracted hours discriminates between the day shift worker and the night shift worker. It gives the day shift worker advantages which the night worker does not have and gives the night worker costs and difficulties which the day worker does not have.

As a small final point, I mentioned transport. We have just had a White Paper published on transport. Anything that cuts down on the use of transport, particularly private transport, would be a good thing.

My argument therefore is straightforward and very much as I put it at Committee stage, though perhaps I take it a little further. It really concerns the balance of unreasonableness which I feel should be placed on the employer rather than on the employee. Throughout this legislation we have been talking about the bad guys because the good employers will always get these things right anyway. I suggest that my argument demonstrates that the balance of unreasonableness should be on the employer and in this case we should be supporting the employee. I hope that the Government will be sympathetic to the suggestion. I cannot move the amendment because it is defective but perhaps we can come together with something at a later stage which the Government will feel they can accept.

Viscount Bridgeman

My Lords, perhaps I may refer to my noble friend's main group of amendments. As was said in Committee, the introduction of the companion or minder—whatever one calls him—on the employer's premises or at some place agreed between the employer and the employee, differs from practice elsewhere and is liable to abuse.

With the greatest respect, I suggest that the Minister sees this as an ideal situation and that the provisions as presently drafted do not provide for unreasonable behaviour by either party. There is also the question of confidentiality to consider and we may get into the situation that the companion says, "I want to see this and that", telling the employee what is his due to be shown. The Bill needs further safeguards.

Lord Falconer of Thoroton

My Lords, perhaps I may deal first with the amendments of the noble Baroness, Lady Miller, in relation to Clause 10. With great respect to the noble Baroness, she again missed the point in relation to what is the protection for employers in this matter.

Everybody agrees that the national minimum wage will not work unless employees have the right to look at the source material; namely, what the material shows they have been paid. That right must be meaningful and provide adequate protection both to employer and employee. We believe that the provisions of the Bill as presently drafted do just that.

There are three safeguards for the employer. First, the right to look at the material can arise only if there are reasonable grounds for believing that the employee is not receiving the minimum wage. Secondly, there is no question—as the noble Baroness keeps upsetting your Lordships by saying—of the employee simply marching into the employer's premises and demanding to see records. He or she must give notice specifying a period at which he or she wishes to inspect the records.

Thirdly, the employer can determine where the inspection takes place. Subsection (8) says, The place at which the relevant records are produced must be—(a) the worker's place of work; or (b) any other place at which it is reasonable, in all the circumstances, for the worker to attend to inspect the relevant records; or (c) such other place as may be agreed between the worker and the employer". Like all great advocates when confronted with the major difficulty in her argument—namely, subsection (8)(b)—the noble Baroness simply read it and said nothing about it. If, as the noble Viscount, Lord Bridgeman, fears, employers are worried about confidentiality and if, as the noble Baroness, Lady Miller, says, employers might be worried about being intimidated by the person who is brought along, then they would be perfectly reasonable in saying, "You cannot inspect at the employer's premises; you have to go somewhere else". They might go to the employee's home, the offices of a citizen's advice bureau if that is sensible, or even a solicitor's office. All of the problems which have been identified can be dealt with under subsection (8).

Clause 10—which in effect would be rewritten as a result of these amendments—is, as I indicated, drafted as it is for very good reasons; that is, reasons to do with fairness and reasonableness. These amendments would either make the clause less equitable or in some cases simply make it less workable.

The Government fully accept that enforcement should not be overburdensome. That is why, in subsections (2) and (3) as I indicated, the Bill makes it clear that the right of access is already limited; for example, the worker must have reasonable grounds for believing that he is or has been paid less than the minimum. In addition, the right of access may be exercised only for the purpose of establishing whether the worker is being or has been paid at least the minimum. That goes a considerable way to meeting the problem posed by the noble Viscount, Lord Bridgeman. Again, as I indicated, the worker must produce a written notice.

Clause 10 as it stands also allows a degree of flexibility; for example in agreeing a different period—longer than the specified 14 days—for the production of records, under subsection (9)(b).

Finally, the clause provides for workers actually to inspect records and to be accompanied if they wish. I believe that is an important entitlement which will encourage workers to exercise their rights and discourage some employers who may be tempted to use unfair tactics of dissuasion.

I did not mean that in any intimidatory way when I said it in Committee and was extremely disappointed to hear the noble Baroness suggest that I did. What I meant by that was that there will be certain circumstances where an employer—there will not be many of them, but there will be some unscrupulous employers who wish to make it as difficult as possible—will simply provide a circumstance which is intimidating to an employee, perhaps a homeworker or someone not skilled in looking at records. In those circumstances it is perfectly appropriate that that person should be accompanied by somebody to help him. if the employer is concerned that he will be intimidated, he can deal with it by identifying somewhere where he thinks it reasonable to have the inspection.

More broadly, it is worth emphasising, that the overall purpose of this and other enforcement mechanisms is to encourage self-compliance. It is far preferable, if at all possible, to encourage employers to comply voluntarily than to have to provide for a huge bureaucracy to do so. Furthermore, by allowing workers to inspect records it should be possible to prevent cases of simple confusion or misunderstanding. That in itself should help to keep cases out of the tribunals and the courts.

The amendments would significantly weaken the position of the worker for no particular reason. In addressing them, I shall aim to focus, as in the earlier debate, on three main issues: the removal, by Amendment No. 17 and related amendments, of the worker's right to inspect and examine his records; the removal of the right to be accompanied; and the lengthening of the time in which records must be produced to 28 days.

Taking each of those points in turn, I believe it is essential to the enforcement provisions for a worker to have the right to inspect records. Of course, in many cases that right will be met by the employer providing the worker with a copy of the records as they relate to him. I imagine that that will be the normal way to proceed because in most cases employers and employees will behave well. But in setting out an enforcement procedure one has always to legislate for those cases where the employer or the employee is not behaving well. That is why it is always necessary, as in all civil litigation, for the originals to be inspectable.

I do not believe that the Bill allows this right to be abused. I doubt whether there will be long lines of employees queuing to inspect their relevant records in person. Subsection (2) already makes clear that the worker must have reasonable grounds to exercise the right. Therefore, the replacement of the right of access with a right to a copy of records would unacceptably weaken the enforcement provisions of the Bill.

This batch of amendments, which hang on Amendment No. 17, would also remove the worker's right to be accompanied when examining the records. As I mentioned, I believe that this right is essential to prevent some employers fobbing off their workers or pulling the wool over their eyes. I do not believe that there will be many such cases, but the option to be accompanied provides a reasonable means of avoiding that.

There is also a pragmatic reason for this provision. Some of the calculations of remuneration for minimum wage purposes may be not at all straightforward and some workers may feel more confident if they can call on a colleague with particular accounting or legal expertise. Again, some workers may not have a complete command of the language to enable them to understand financial or legal terms. The outcome of this provision should assist understanding the position and, to the extent that there may have been an innocent misunderstanding, should encourage early resolution of the problem.

Finally, the amendments would double the amount of time allowed to an employer to produce the records from 14 to 28 days. There seems to be no reason for this proposal. It seems to me that any reasonable employer would be able to produce records relating to how much he pays his staff within a fortnight. Subsection (9) of the clause in any event allows the worker and employer to agree between them an extension of the deadline if that is appropriate. So we have already built in more than sufficient flexibility for employers and employees.

That leads me to Amendment No. 23; for not all the amendments act in the interest of the employer. This amendment deletes subsection (9). It would therefore actually remove the right of the worker and employer to reach agreement on a longer timescale. I am surprised to see this amendment survive, despite apparently working against the interests of the employer, and no argument has been advanced in support of it.

As I indicated, we have designed the clause to be effective in a balanced way, not in order to over-burden or punish employers. It is in everyone's interests, workers and employers, for enforcement to be fair, and in particular for enforcement to be effective.

Perhaps I may come back to what I think is the noble Baroness's underlying fear that the clause allows employees to march into employers' premises and look at records. It does not. That is the misconception that underlay the whole of the noble Baroness's submissions. I would earnestly ask her to think again on the amendments and not to continue to upset the House with her constant reference to constitutional outrage.

We talked on the previous occasion about the issues raised by the noble Viscount's amendment. There is not much I can add to what I said before. The Government can sympathise with the thinking behind the amendment as it is intended to ensure that the worker is not caught out by some sharp practice. However, I believe that we should be able to rely on common sense in this area. Subsection (9)(b) already envisages that there may be agreement between the worker and the employer as to the deadline within which the records must be produced. In the same spirit I would hope that employers and workers can reach a sensible agreement about when the records are produced. It seems disproportionate to seek to regulate that timing. Furthermore, as I pointed out in Committee, it is somewhat inflexible to follow the approach proposed by the amendment. On some occasions it may suit both parties to see the records at a time outside the working hours of the individual concerned. Yet the amendment would have the effect of preventing such a sensible arrangement. For those reasons, I hope very much that the noble Viscount will not move his amendment.

Baroness Miller of Hendon

My Lords, I listened with enormous care to the noble and learned Lord. I was surprised that he referred to my upsetting the House with constitutional matters. It seems to me that the Government are bringing forward lots of constitutional matters which undoubtedly are upsetting many parts of your Lordships' House. I certainly did not hear any murmurs of upset on the few remarks that I made.

I quoted from the noble and learned Lord the line about discouraging some employers who may be tempted to use unfair tactics or dissuasion. I said that that sounded like intimidation to me and not that the noble and learned Lord was saying it. I said that if a minder came onto the premises I might feel some kind of intimidation. However, I totally accept what the noble and learned Lord said on that point, and not for anything would I upset him. In fact he was smiling at me very nicely at the end, but he was not smiling at me at the beginning when he said those words.

I am amazed that the noble and learned Lord continues to say that one may not go onto the premises. He referred to subsection (8)(a) and then put subsection (8)(a) and (b) together. I think that we will have to agree to disagree on that one. However, with regard to the copies, the noble and learned Lord said that he is sure that that is the normal way for that to happen. Yet he continues to say that by providing that that is what should happen, it would in some way weaken the Bill. I cannot agree. I shall certainly withdraw the amendment at this stage and read very carefully what the noble and learned Lord said. However, I reserve the right to return to the matter again at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 18 to 27 not moved.]

Clause 11 [Failure of employer to allow access to records]:

[Amendment No. 28 not moved.]

Lord Haskel

My Lords, I beg to move that the Report stage be now adjourned. In moving this Motion, perhaps I may suggest that the Report stage begin again not before 8.35 p.m. If we are to get through the Motion of noble Lord, Lord Campbell of Alloway, during the hour, perhaps I may suggest that the noble Lord, Lord Campbell of Alloway, speaks for not more than 10 minutes, the noble Lord, Lord Dubs, for not more than 12 minutes and all other speakers for not more than five minutes.

Moved accordingly, and, on Question, Motion agreed to.