HC Deb 28 July 1998 vol 317 cc258-63

Lords amendment: No. 2, in page 2, line 11, leave out ("and times at which,") and insert ("times at which, or the time for which,").

9.8 pm

Mr. Ian McCartney

I beg to move, That this House does agree with the Lords in the said amendment.

Mr. Deputy Speaker (Mr. Michael J. Martin)

With this, it will be convenient to discuss Lords amendments Nos. 3 and 4.

Mr. McCartney

The amendments deal with a specific technicality, which became apparent following the Low Pay Commission's recommendations and initial work on drafting the regulations. The general effect of the three amendments is to extend slightly the flexibility of the power to calculate the rate. We want to be absolutely confident that the clause provides us with the power that we need to deliver through the regulations what the Low Pay Commission has recommended regarding the treatment of home workers who are paid by the piece.

Let me remind the House how clause 2 works. Hon. Members should note that it deals with the determination of the hourly rate of remuneration. The clause was drafted flexibly to enable us to reflect, as far as could be envisaged, whatever the Low Pay Commission might recommend in its report regarding the calculation of the hourly rate for national minimum wage purposes. Basically, it is a technical clause, but one which is important to the flexible operation of the Bill. It provides the flexibility for a wide range of possible permutations in determining what elements of pay can be included or excluded—for example, overtime, bonuses, benefits and holiday pay. It enables a wide range of working situations to be taken into account, including piece work, payment of standard wages at a regular rate and payments on commission or at different rates over different periods.

Since receiving the report, we have been considering the practicalities of putting into effect the Low Pay Commission's recommendations. In particular, we have been considering those workers who work away from the office and are paid by output, rather than time worked. For that particular case, it has become apparent that the clause may not be quite flexible enough. In particular, the commission's recommendations suggest that piece workers should be entitled to the hourly minimum wage for every hour worked regardless of the piece rate, and that employers of home workers should be able to demonstrate that piece rates have been evaluated to confirm compliance. The fairest and least bureaucratic way to do that is to ensure that there can be agreement between worker and employer about the maximum hours to be worked and the output expected. We need to ensure we have the vires to do that under clause 2. Therefore, we are proposing three amendments to the clause, the third of which is purely consequential.

Lords amendment No. 2 deals with subsection (3), which relates to how working time is to be treated for minimum wage purposes. The amendment ensures that the regulations can prescribe those times for which a worker can be treated as working. The amendment is a technical rewording to ensure that we have the vires to prescribe in regulations that, where piece workers work at home with no agreed hours, the worker and employer may together agree the maximum hours that are to be worked and claimed.

Lords amendment No. 3 deals with the same subsection and makes explicit the power to prescribe that an agreement may be reached regarding the maximum or minimum time that a person shall be treated as working. As with Lords amendment No. 2, that change is necessary in the case of the piece worker working at home with no present limit on the hours to be worked. In the interests of legal certainty, it ensures that we have sufficient flexibility to implement the Low Pay Commission's recommendations regarding piece workers and home workers through the regulations.

The clause was drafted flexibly, but needs to be supplemented by means of those technical amendments to ensure the practical implementation of the LPC's recommendations on piece workers working from home. I ask the House to support the amendments.

Mr. Boswell

I am grateful to the Minister for tabling the amendments and explaining them. Indeed, his explanation was consistent with—or almost precisely in the same terms as—that of his noble Friend and former colleague in another place. It is almost six months to the day since the Minister of State—who we are glad is still around to conclude these proceedings—my colleagues and I locked horns in a couple of momentous all-night sessions in detailed consideration of the Bill. The need for detailed consideration remains and it is right that we should study some of the amendments and not merely pass them on the nod. I do not want to agitate the hon. Gentleman unduly by suggesting that it will be necessary to continue our deliberations all night, although it is fair to say for the record—particularly as I suspect that my colleague from the Whips Office would want me to be shown to be earning my keep—that 32 of the 36 amendments under consideration emanate from the Government.

The whole message of the Bill has been that, although the concepts have been relatively simply, the devil is inevitably in the detail and it is extremely important, in the interests of employers and their employees and of the Government and Ministers, that they get it as right as is humanly possible.

That brings me to consideration of the amendments. I shall not advise my hon. Friends to object to them, unless a new point arises beyond what the Minister has said. First, I am slightly concerned in one respect about what the Minister said and what his noble Friend said in another place. The Minister emphasised that the amendments provide greater flexibility. That is entirely consistent with the arguments for flexibility that my hon. Friends and I were advancing throughout the Committee proceedings. I do not understand from the Minister's explanation in which direction the flexibility will operate. He said in response to the Low Pay Commission that piece workers should be entitled to the hourly minimum wage for every hour worked, regardless of the piece rate, and that employers of home workers should be able to demonstrate that piece rates had been evaluated to confirm compliance. He said that that would have to be achieved by agreement between employers and piece workers.

Agreement might be reached, but what would happen if the agreement did not coincide with the facts? For example, piece workers might work all the hours that they claimed to have worked but not produce the number of pieces that they agreed to produce. Conversely, piece workers might turn out more pieces than had been agreed but not receive greater remuneration. There are potential problems in those cases.

I take it that the Minister is saying that, in the interests of legal knock for knock, there should be a functional arrangement and the two parties should come to an agreement. I do not object to that in principle, although, given the points that the Minister made so vigorously in response to my right hon. Friend the Member for Wokingham (Mr. Redwood) about the lot of piece workers—I share some of the Minister's concern for their position—it is not always clear that such an agreement would be made on all fours between equal parties. I presume that the amendments concern a privilege that the Minister will want to monitor carefully.

My second concern for the House is that the proposal for a more flexible agreement needs to be considered alongside the provisions for what might loosely be termed the normal cases of employers and employees who are paid by the hour, week or month. The Low Pay Commission, whose report we did not have in our deliberations in Committee, considered all those points carefully. It came to a conclusion on the pay reference period that the Minister said is highly technical, but which exercised us because of the potential for error. The commission's recommendation is that the averaging period for the National Minimum Wage should be the normal pay period, as agreed between worker and employer"— so the element of agreement is included— up to a maximum of one calendar month. We believe this is long enough to capture most fluctuations in earnings. The report goes on to say that there could be a case for low-paid workers who are covered by annualised hours arrangements. For the sake of completeness, I remind the House of the point that I made about my employee who works on my farm. He is salaried and receives an even rate whether he works for long hours during harvest or for shorter periods in the middle of winter. The commission's recommendation for a one-month maximum could lead to average hourly pay for employees working the longer hours pattern falling below the national minimum wage. The commission recognises that in such circumstances employers and workers may need to …restructure their pay systems. That precisely encapsulates the concern which we expressed in Committee that, for all the efforts to reproduce the flexibility and complexity of economic arrangements and systems for the payment of remuneration in this country, inevitably, the introduction of the national minimum wage would create a need for some systems to be changed, even if they were the most sensible form of payment for the parties concerned.

In concluding my remarks on the clutch of amendments before us, I tell the Minister that I may not need to intervene on all the groups of amendments, but I wish to raise several points on later groups.

We understand that home workers are an especially sensitive group. We understand that piece workers—who are not necessarily exactly the same as home workers but have some similarities—will need to be given some flexibility in working out their pay in relation to their output and the number of hours worked, and thereby in working out whether the employer or the employment arrangement complies with the national minimum wage. However, that requirement must not provide an inside track, giving those workers a privileged flexibility that is not available to other, perfectly reasonable, employers and employees who wish to make arrangements that are consistent with the spirit of the Bill.

In a sense, one vital card is still unplayed; until the Bill becomes an Act and for a time afterwards, the Minister will be unable to give us draft regulations to explain how matters will be dealt with in the normal case. Only then shall we get flesh on the bones of other situations and know whether the provisions are sensible and flexible enough.

It is right to put down those markers now. Obviously, they have nothing to do with the principle of the Bill, but they are designed to ensure that it operates fairly. I would welcome the Minister's response.

Mr. Chidgey

I am sure that the Minister would agree that the amendments—which I am sure are eminently sensible—try, to a degree, to clarify what we mean by "working time". I therefore ask him to clarify a specific point.

Shortly, legislation implementing the working time directive will come before the House. I should like the Minister, if he can, to clarify whether subsequent legislation on the working time directive will use the definition of "working time" used in the Bill, or whether we may have two definitions in two pieces of legislation.

Mr. Ian McCartney

I thank the hon. Member for Daventry (Mr. Boswell) for his kind remarks. I thank him also because I understand that he petitioned the Prime Minister to ask for me to remain in this job—as did the Confederation of British Industry, the Institute of Directors and the Federation of Small Businesses. They are all behind me. The hon. Gentleman's personal warmth and appreciation of my being here is taken in the spirit in which it was intended. The hon. Gentleman and I have spent a considerable part of the last year of our lives dealing with these issues. In Committee and on the Floor of the House—despite our sometimes rumbustious debates—I have welcomed the fact that he has often been more than fair in the way in which he has drawn attention to issues. The questions that he asked tonight were well made and well intended.

The agreement would concern the hours worked and to be claimed; it would not be about the rate, because the rate will be effected in regulations. We are trying to ensure that there is some capacity for the employer, at the outset of the work to be carried out, to have an agreement with the worker that gives some clarity about the hours and the nature of the work to be carried out within a time scale. That is important because, if we are to give—as we shall do—the right to be paid the minimum wage for all hours worked, it is important that the employer does not have an open-ended arrangement by which someone gets paid for 13 hours' work when there is only two hours' work to be done.

It is important that flexibility works in two ways. There must be good practice, which is not always the case with piece workers or home workers. Employers may turn up and say, "Here is the work to be done; we will come back in the morning and, if it is not completed, we may or may not pay you the following rate." The legislation will ensure good practice and it will mean that the employer must reach an agreement with the employee at the outset about the nature of the work and the hours of work. That will protect the employer from a totally open-ended commitment and from having to pay for work that was not done.

It will also create some clarity for the employee, who will have an absolute guarantee of receiving at least the national minimum wage. It may mean a different calculation at the end of the reference period. For example, if a worker is entitled to be paid £3.60 an hour and, at the end of the agreed reference period, the piece work is calculated at £3 an hour, the employer must make it up to £3.60 in order to ensure compliance with the minimum wage. It is important that the proposals before us are approved in order to introduce some certainty into the system.

The hon. Member for Daventry asked what would happen if there was disagreement about the work to be done and the duration of that work. That is a matter for dispute resolution; it is not a matter for these regulations. It is a matter of employment practice between the employer and the employee. I hope that that hon. Gentleman will accept that that is the Government's intention in that regard.

It is intended that the introduction of both the national minimum wage and the working time directive will impose minimum burdens on business and that they will be enforced effectively. They will be matched as closely as possible, but they do not always measure the same thing. Time worked for health and safety reasons is different from the calculation of time for pay purposes. There may be differences in some cases when considering hours worked for national minimum wage purposes. As far as possible, we shall ensure that the minimum wage and the directive match. However, different issues must clearly be catered for.

Mr. Chidgey

I acknowledge the Minister's answer—I have probably thrown him a bit of a googly, and I accept that he is doing his best. Does he accept that, with the forthcoming working directive and the minimum wage legislation, employers and employees could have difficulty in trying to meet different requirements for measuring working time?

Mr. McCartney

I have said clearly that we have conducted extensive consultation on the working time directive. It deals with two issues. The first is health and safety and how we can make sure that entitlements under legislation dealing with health and safety in the workplace are calculated for the purposes of ensuring compliance. The second issue relates to ensuring that people do not suffer any detriment when claiming their rights under the working time directive. There are two regimes within the directive: the first ensures that health and safety standards are maintained or improved, and the second ensures that no employee is sacked or suffers some form of discipline for clearly exercising his or her rights under the directive.

The hon. Member for Eastleigh (Mr. Chidgey) raises a simple matter. We cannot consider health and safety matters in the same way we consider whether someone has received the proper minimum wage for the hours worked. For example, under the working time directive, employers will be required to keep records in order to ensure that night-time workers are not forced to work more than the number of hours set out over the reference period. In addition, the employer will be required to ensure that medical checks and health assessments are carried out from time to time to make sure that the employees' working hours are not detrimental to their health. We are measuring different things and the regulations will be applied differently. That is the sensible way to approach the issue.

The hon. Member for Eastleigh has not really thrown me a googly. That is rather a nice English phrase. It is not a phrase that you, Mr. Deputy Speaker, or I, would recognise from Glasgow. Other phrases would go well with it, but I shall leave them for another day. However, I get the hon. Gentleman's point. When the Bill is enacted, we will move as quickly as we can to put into the public domain the draft regulations and the consultation. I welcome the opportunity for participation that that will give Conservative Members. It is important to us, as it is to anyone in favour of the minimum wage, to ensure that the regulations work effectively and that employers realise that they are not burdensome while allowing proper compliance with the legislation.

Lords amendment agreed to.

Lords amendments Nos. 3 and 4 agreed to.

Lords amendments Nos. 5 to 7 disagreed to.

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