MEANING OF "WAGES" (Hansard, 14 May 1986)

§ Mr. Kenneth Clarke
I beg to move amendment No. 45, in page 9, line 23, at end insert— '(aa) any payment by way of an advance under an agreement for a loan or by way of an advance of wages (but without prejudice to the application of section 1(1) to any deduction made from the worker's wages in respect of any such advance);'.

§ Mr. Speaker
With this it will be convenient to take the following amendments: No 46, in page 9, line 26, at end insert ', allowance or gratuity in connection with the worker's retirement or as compensation for loss of office;'. No. 47, in page 9, line 29, at end insert— '(2A) Where any payment in the nature of a non-contractual bonus is (for any reason) made to a worker by his employer, then, for the purposes of this Part, the amount of the payment shall—
(a) be treated as wages of the worker, and

(b) be treated as payable to him as such on the day on which the payment is made .' .

§ Mr. Clarke
It is a long time since I have heard technical and drafting amendments debated with such heat, vigour and care on Report, but I hesitate to say that amendments Nos. 45, 46 and 47 are technical amendments. They deal with clause 7 which sets out the definition of wages. They are designed to sort out some confusion in the way loans and advances of wages, lump sums on retirement or loss of office and non-contractual bonuses are treated in the definition of wages. I commend them to the House.

§ Mr. Nellist
It is only 9.52 pm and I do not wish to disappoint the Paymaster General.

§ Mr. Speaker
It is no disappointment—the hon. Member has all night.

§ Mr. Nellist
Hon. Members who have taken part in the debate, which has lasted for about five hours, may be content to leave this group of technical amendments so that their hon. Friends from London can deal with the EEC and parental leave for child care. However, before we conclude, I shall ask the Paymaster General for an explanation of the effects of the Government amendments. It is not good enough, even at the tail end of a long day's debate, to state that the amendments are additions to matters outside the definition of wages. Subsection (2) payments are excluded from subsection (1) sums. There was heated debate in Committee on the sums mentioned in subsection (1), especially about bonuses and piecework rates. My hon. Friend the Member for Sheffield, Central (Mr. Caborn) moved an amendment on that point. He may think that the points he made then are still worthy of being repeated.
Why are there such large changes in the definitions of wages, especially with respect to the exclusion of benefits in kind, in the Wages Bill 1986 compared with the Truck Act 1831? The original definitions in the Truck Acts are superseded by the provisions in clause 7. There was no mention of many of the benefits in kind which are still pertinent to workers, including tied accommodation, meals on premises and-I hesitate to say this because of our earlier exchanges - company cars, which the Minister assured me were a benefit in kind. By not mentioning those items, does clause 7 mean that they are up for grabs when it comes to deductions? If the deduction 799 is limited to 10 per cent. for specified items, and other items are not mentioned, does that mean that those that are not mentioned can be made the subject of larger deductions by employers, if they wish?

§ Mr. Kenneth Clarke
The hon. Member for Coventry, South-East (Mr. Nellist) is entirely within his rights to ask for a more careful explanation if he is worried about these technical amendments. The starting point of his query was the question: why are we taking such care to draft the definition of wages in this way and moving a little from the definition in the 1831 Act? I remind him that the Bill contains two innovations which make it important that we get the definition right and which will assist those in tribunals and elsewhere who have to apply it.
One innovation is the 10 per cent. limit on the deductions that can be made from the wages of retail workers and the other is the new right of access to an industrial tribunal where there is a dispute about the deductions. It is important, especially in calculating the 10 per cent. limit, to know exactly what that limit is and to have an extremely precise definition of wages. The amendment has been moved because it represents a further attempt to define exactly what is meant by wages and what is excluded.
The hon. Member for Coventry, South-East correctly spotted the fact that all three amendments are concerned with additions to the list of matters which, for the purposes of the Bill, are not to be regarded as wages. Although that may sound disadvantageous, it is not.
On amendment No. 45, by ensuring that loans and advances of wages are not included in the meaning of wages, one reduces the total amount that counts as wages and therefore reduces the amount that the employer can lawfully deduct under the 10 per cent. limit. If loans or advances of wages were permitted to be added to the total sum for the purposes of this definition, the effect would be to weaken the protection to the worker, because 10 per cent. of the lawful deduction would be a higher sum.
Amendment No. 46 defines payment by way of payments that are akin to pensions, which are already excluded in the Bill as originally drafted and which were considered in Standing Committee. We consider that lump sums paid on retirement and sums paid in compensation for loss of office are similar to payments by way of pension. They have been excluded from the definition of wages because we believe that disputes about such matters should be resolved by the courts and are not really within the compass and competence of the tribunals which would otherwise find themselves being drawn into this somewhat complex area.

§ Mr. Nellist
Will the Minister give way on that point?

Mr. Clark
May I just answer all the hon. Gentleman's queries?
Amendment 47 deals with payments made to a worker by his employer of sums to which the worker is not 800 contractually entitled. It can be called a "non-contractual bonus". When those sums are paid to the worker, they would not, as originally defined in the Bill, count as wages because they are not legally payable. The amendment ensures that, for the purposes of part 1 of the Bill, repayments are treated as wages and subject to the provisions.

§ Mr. Nellist
Does amendment No. 46 include accrued holiday pay in the payment of money to workers for redundancy and so on?

§ Mr. Clarke
I had sat down because of the 10 o'clock rule. Holiday pay is already dealt with in the Bill as drafted. In clause 7 on page 9 holiday pay is "wages" for the purpose of this part of the Bill.