ADMINISTRATORS: PRIORITY OF LIABILITIES UNDER ADOPTED CONTRACTS OF EMPLOYMENT (Hansard, 21 March 1994)

§ Mr. Gunnell
I have a question on clause 1(6), which inserts new subsections in section 19 of the 1986 Act. Subsection 7(b) defines a qualifying liability as in respect of services rendered wholly or partly after the adoption of the contract. Why are the words "or partly" included? What would be the effect of that section if those words were not present? New subsection (8) relates to qualifying liability. Clause 2 inserts subsection (2B) into section 44 of the Act and clause 3 amends section 57 of the Act by inserting a new subsection (2B). There seem to be differences in the wording used in lines 24 and 35 and in the new subsection 47 (2B). Does the Minister have any explanation for the differences, given that all the clauses are designed to do the same thing?

§ Mr. Neil Hamilton
The hon. Gentleman lost me at the end of his remarks. Could he repeat his final point?

§ Mr. Gunnell
Compare page 2, line 8 of the Bill with line 30 in clause 2(2). The wording is different. Technical practitioners want to know whether there is any significance in the difference in wording in respect of the qualifying liability and its extent. There is a difference, which technicians do not quite understand. I thought that the Minister might be able to put them right.

§ Mr. Hamilton
I think that it is not only the technicians who do not understand. I am afraid that I am not able, off the top of my head, to answer the hon. Gentleman's latter point, although there does not appear to be a discrepancy in the meaning of the words in clause 1(8), so much of any qualifying liability and the words in clause 2 (2), to the extent of any qualifying liability". I shall certainly take advice from my lawyers and I will write to the hon. Gentleman to ensure that the matter is put beyond doubt.
The hon. Gentleman also asked about subsection (6)(b), and the words in respect of services rendered wholly or partly after the adoption of the contract. I do not think that there is any ambiguity or difficulty in that wording. The new section 19(7) of the amended Act defines a qualifying liability as a liability to pay … wages or salary", or pension contribution, in respect of services rendered by the employee, whether wholly or partly after the adoption of the contract. Accordingly, any liabilities arising under a contract of employment that do not fall within that description will rank as unsecured claims against the company. The provision is included simply for purposes of completeness: part performance of a contract in itself gives rise to a liability, and the drafting of the legislation must reflect that.
Employees may well be employed for only part of a period of receivership, rather than the whole period. The wording would aptly cover those circumstances as well.
I hope that I have been able to answer the hon. Gentleman's questions. If not—ah, I have been handed a piece of paper: the seventh cavalry has arrived. I am told that there is no difference in substance between the new section 19(8) and the new section 44(2B), although they are cast in slightly different terms for technical reasons. I shall ask what those technical reasons are, and whether there is any justification for them; and I shall ensure that the hon. Gentleman is informed of the result of my inquiries.

§ Mr. Gunnell
I thank the Minister. I shall ensure that the technicians read his answer; if they are not satisfied, I shall write to him.