HC Deb 09 March 1998 vol 308 cc210-9
Mr. Chidgey

I beg to move amendment No. 3, in page 7, line 28, at end insert— '(2) Regulations made under this section shall require employers to keep records in respect of—

  1. (a) full-time workers;
  2. (b) part-time workers;
  3. (c) home workers;
  4. (d) agency workers; and
  5. (e) such other classes of worker as may be prescribed and may impose different requirements in respect of different classes of worker.'.

Mr. Deputy Speaker

With this, it will be convenient to discuss the following amendments: No. 63, in clause 29, page 20, line 2, after 'so', insert 'without good reason'.

No. 64, in page 20, line 11, after 'particular', insert 'or knowingly fails to disclose any record or information which he knows to be relevant to the case'. No. 65, in page 20, line 18, at end insert— '(5A) A person should not be prosecuted under this section unless the officer investigating the case is satisfied that all reasonable steps have been taken to satisfy the interests of the worker or workers concerned through the civil proceedings set out elsewhere in this Act.' No. 4, in clause 33, page 22, line 14, after 'section', insert 'and section 9(2) above'.

Mr. Chidgey

The amendments would require employers to keep records of full-time workers, part-time workers, home workers and agency workers. Their fundamental thrust concerns the plight of people who want to be home workers for reasons of economic necessity and who fall foul of what can only be described as criminal schemes to fleece them of what little cash they have.

Last week, with the help of my staff, I uncovered a scam. It is a simple affair. People respond to an advertisement in the free papers that are available in all parts of the country. It offers an opportunity to work at home and to earn substantial amounts of money. When they send their post-paid return envelope, back comes a load of literature telling them how they can earn £1.50 to £2 per envelope. It must be a magic envelope. The company thanks them for their inquiry and tells them that they have been specially selected because it needs people in their area to do this work from home. It explains that they will have a chance of financial freedom and an opportunity to make as much money as they want.

Such companies are anxious to engage only serious people. To ensure that people are serious, they are asked to pay a small registration fee of £10, £15 or £20. I am advised by the National Group on Home Working that people part with their money and receive useless stuff that they are told to assemble into a kit and to send back to the firm concerned. They do so, only to find that they have failed to meet the quality standards that the firm says they must meet, although it does not define them. People do not get paid £2 or even £1.50 an envelope, and they do not get their registration fee back.

That is just one example of criminal behaviour under the guise of providing work for home workers. My staff pursued the case and went to the address on the information that was sent to them. The fancy address referred to a suite in London but it turned out to be one of several letterboxes on the wall of a little post office or corner shop in London. When the proprietor saw my staff trying to find what on earth was going on, he said, "We have had many people trying to get their £15 back."

4.30 am

The amendment illustrates the need for keeping records for home workers so that we can try to check on people who make dubious or criminal offers of employment—which turn out to be non-employment—to home workers who are already desperately short of money. I have given just one example of what is going on. The Minister will be aware of a code of practice that has been put together by the Advertising Standards Association. The Minister will be interested in the comments and recommendations of the National Group on Home Working. My amendment provides an opportunity to raise this issue and to warn people of the risk of being criminally parted from their money by those selling bogus home working schemes.

Mr. Forth

What is the process of registration? The hon. Gentleman speaks about it as if it is the answer to all the problems that he has outlined but I am not clear on whom the responsibility for registration will fall and how it will work. Can he give us more details?

Mr. Chidgey

I should be delighted to do that. If the right hon. Gentleman refers to the Bill he will see the necessity for employers to keep records. National minimum wage officers will make sure that employers maintain such records. [Interruption.] Perhaps I may be allowed to explain the matter. The right hon. Gentleman surely understands the need to ensure that employers who deal mainly or totally with home workers keep records for them that are as full as those that are kept for full-time employees working in company premises.

Mr. Hammond

Does the hon. Gentleman agree that it is also essential for home workers to keep records because the employer will not be privy to everything that goes on in the homes of those people and how many hours are spent on a given task?

Mr. Chidgey

I do not disagree with the hon. Gentleman. If he is aware of the recommendations offered by the National Group on Home Working, he will know that it is eager for home workers to keep such records and to join the group so that they have additional protection.

I think that I have clearly explained the reason for the amendment and I hope that the Minister will be able to provide some comfort and perhaps provide information on how the Government are addressing a serious issue that could affect many thousands of the poorest people in society.

Mr. Boswell

I do not intend to follow the line of the hon. Member for Eastleigh (Mr. Chidgey), but that does not mean that I am out of sympathy with what he said. The amendments in my name and that of my right hon. Friend the Member for Wokingham (Mr. Redwood) are somewhat different, but they are of a piece because they reflect the concern of many hon. Members to get the legislation right and to ensure a fair income. As the Minister knows, perhaps more concern was expressed about what is now clause 29 on legal offences than on almost any other part of the Bill. That is proper, because criminal offences are serious matters and prosecutions should not be lightly undertaken. They certainly have a major impact, particularly if an employer is guilty of a technical offence.

I know that the Minister will tell me that the intention is that prosecutions should be reserved not for technical offences, but for serious failures to comply with the legislation. We have no time for proceedings against technical offences either, but it is important that we do not stumble into something by accident.

Amendment No. 63 requires that a person should be required to keep or to preserve any record and that, if he fails to do so "without good reason", that would be an offence. We added the words "without good reason" because we were concerned that people might inadvertently have records destroyed through no fault of their own. For example, I mentioned in Committee the possibility of the millennium bug, a fire or even a malicious employee destroying records. Those are all potential scenarios. I think that the Minister has covered this in a different group of amendments by providing for a due diligence defence, but I should be grateful if she would comment on the matter.

Amendment No. 64 relates to a different point, which goes back to the exchanges between my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) and the hon. Member for Eastleigh. It relates to people who may have information that they know bears on the case, but which they are not disclosing. I do not know whether the aims can be effectively achieved but, again, I should appreciate a response from the Minister.

If people are asked for material about a particular case and disclose some material that may or may not have been requested, but knowingly fail to disclose something else that they clearly know is relevant to the case—for example, if a home worker has kept home-working records that give a different story from the one that he or she claims—that should, in principle, be an offence. It is not an easy one to prove. There is an important point of balance here between the liberty of the individual, whose business and reputation may be at risk, and the aim of the provision.

I broadly describe amendment No. 65 as a last-resort amendment. We ask that the prosecution should not be proceeded with unless it is absolutely the last resort in that civil remedies have failed. That is entirely consistent with paragraph 44 of the regulatory appraisal that the Department has produced, which says: We would not expect the enforcement agency to pursue criminal prosecutions except as a last resort after other enforcement mechanisms had failed, since the main purpose is to ensure compliance rather than exact punishment. But there needs to be a penalty for any who continue to flout the law. I have no difficulty with that paragraph. Indeed, we have tried to put it into legislative form in our amendments.

Mr. Collins

I should like to confine my remarks to amendments Nos. 3 and 63. I shall take the second of those first.

It is important to bear in mind the fact that the records of many employers are, through no fault of their own, destroyed, as my hon. Friend the Member for Daventry (Mr. Boswell) has said. A few months ago, a farmer constituent came to me in considerable distress because his family farmhouse had been burnt down and all his agricultural records had been destroyed. With the destruction of his records, he was unable to qualify for important Ministry of Agriculture, Fisheries and Food grants that he would otherwise have received. Therefore, because of that fire, he lost a material amount of income.

Without amendment No. 63, there would be a further risk. Farmers or other employers whose records were destroyed through no fault of their own—in the case of my constituent, the fire destroyed his home as well as his records of work—could find themselves liable to criminal proceedings for not having kept records. It was their intention to keep those records, but they were destroyed through fire, an act of God or another form of natural or man-made disaster. Amendment No. 63 is important for that reason.

Amendment No. 3, tabled by Liberal Democrat Members, is important for an entirely different reason. It is the point at which their mask slips. It has often been their contention that Liberal Democrats are the moderating influence on the Government; that they help to pull the Government towards the centre on some issues; and that in particular, unlike the Government, they have a long-standing tradition of support for enterprise, entrepreneurship and successful businesses. However, amendment No. 3 would take the provisions of an exceedingly bureaucratic, interventionist and top-down Bill and make them even more onerous on employers by specifying in great detail the way in which records, which are already required under the Bill, have to be kept and set out in different categories. For that reason, the House should reject amendment No. 3.

Mr. Bercow

I concur with my hon. Friend's sentiments. Does he agree that it would be marginally less bad if the Government had specified in the Bill the different regulations that would apply to different categories of worker? In fact, the pain would be much worse under the Liberal Democrat proposal because the regulations, which will contain various differences in respect of different categories of workers, will materialise months or possibly years hence. So we have not only the tedium of the differences, but the pain of waiting to discover what the differences are.

Mr. Collins

Indeed, there is considerable pain and absolutely no gain for an employer, which shows how the Liberal Democrats are now a party of the left—the hard left—which has abandoned any pretence of being a pro-business party, or even an enterprising party. That is why amendment No. 3 should be rejected.

Mr. Hammond

I want to make a few brief comments about amendment No. 64.

Mr. Chris Mullin (Sunderland, South)

On a point of order, Mr. Deputy Speaker. Would it be in order to add 5p to the rate of the national minimum wage for every hour that this nonsense goes on?

Mr. Deputy Speaker (Mr. Michael Lord)

That is not a point of order for the Chair.

Mr. Hammond

More frightening would be to take 5p off the rate of the national minimum wage for every hour during the night that the hon. Member for Sunderland, South (Mr. Mullin) has not been in the Chamber listening to the debate.

Amendment No. 64 would create an offence of withholding information that is available and required in a relevant case. I want to take the Minister back to the question of asymmetry. There is no requirement in the Bill on workers—and I am referring specifically to home workers—to keep records. That point was raised earlier and I thought that I saw the Minister nodding to suggest that she recognised that there was a need for such a requirement. However, she did not deal with that in her speech, so I would like her to touch on it when she replies to this debate.

Does the Minister agree that for an employer even to know whether he has met his legal obligation to pay the minimum hourly rate for each hour worked in the case of a home worker, the home worker must keep records? It would be both consistent and symmetrical if the Bill contained an obligation for that home worker to keep records, in the same way that there is an obligation on the employer to keep records.

Mrs. Laing

I am concerned about the additional bureaucratic burdens which the requirement to keep complicated records will place on businesses, and especially small businesses. It would be interesting to know whether the Government have carried out, or intend to carry out, a compliance cost assessment, especially in relation to small businesses.

It is a serious matter to place a burden on employers, especially small employers, that can lead to criminal penalties, not just civil duties. A duty may be perfectly reasonable for a large company that has a large personnel department, legal advisers, accountants and so on, whereas a small business does not have those advantages and often has difficulty coping with bureaucratic requirements. Many small businesses in my constituency are struggling to keep afloat while satisfying the bureaucratic demands of the Inland Revenue and others to fill in forms. It is likely to be the final straw for such businesses if extra bureaucratic requirements are placed on them without the Government having considered a compliance cost assessment and the consequences, which are also consequences for the employment of the very people whom the Government say they want to protect.

4.45 am
Mr. Roger Gale (North Thanet)

I should like to speak primarily to amendment No. 65, although I should like first to comment on amendment No. 3. The hon. Member for Eastleigh (Mr. Chidgey), although suggesting the wrong solution, has highlighted a very real problem. Probably every hon. Member has represented constituents who occasionally have been fleeced by fraudulent—that is the only word for them—home-working organisations, or so-called organisations, which ultimately turn out to be, as the hon. Member for Eastleigh has so graphically described it, a fly-by-night letter box drop somewhere in north London. Someone runs off with a lot of money belonging to some of the very poorest people in the country.

The hon. Member for Eastleigh has, therefore, identified an absolutely genuine need. However, I agree with my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) that amendment No. 3 is a top-down solution. There must be a way under the straightforward fraud provisions of the criminal law in which we can bring to book such so-called companies. However, it is a matter not only of bringing them to book, but of then preventing them from springing up under another name, 30 seconds after they have gone into liquidation, with someone else's money.

With due respect to the hon. Member for Eastleigh—who has clearly put much effort into his amendment and who raises a real concern—I do not think that his amendment is the way forward. I shall, therefore, be unable to support it, although I have great sympathy for his cause.

I speak now to amendment No. 65. For 15 years, I have represented the constituency that has had the highest unemployment level in the south-east. It gives me no satisfaction to say that, although that unemployment rate is—or was—falling dramatically because of the previous Government's economic policies. Much of our new employment has been created not by very large companies moving into the constituency—they have not—but by small companies which are often one or two-man businesses. Those people occasionally grow sufficiently to be able to take on, very often, a young person—the type of person at whom the new deal is supposed to be directed.

The entire Bill represents a very considerable disincentive to those small businesses to take on new employees. Not only are small businesses now thinking that they will not take on new employees, but—in some instances, in family firms in which a husband and wife have taken on someone—they are determining whether they can lay off people by working longer hours themselves. They know that their business will not be able to sustain any meaningful minimum wage level.

If one imposes on that disincentive an entirely new structure and the threat of criminality for failing to comply with some pettifogging bureaucracy, there will be an even greater disincentive to small businesses to take on the new employees whom I, as their Member of Parliament, want them to be able to employ. I agree entirely with my hon. Friend the Member for Daventry (Mr. Boswell) that any measure enforced through the criminal law should be a measure of last, not first resort.

All hon. Members have had experience of two types of people: of rogue employers, for whom I have absolutely no sympathy; and of disgruntled employees—who will make any complaint whatsoever against someone who, in good faith, has taken them on and tried to employ them well. Such employees have simply not come up to scratch by satisfying the requirements of the job. After they are fired, they go away and make one complaint after another, of one type or another. I believe that, if such a person can now go straight to criminal law before having exhausted the civil remedies that are already available, employment in my constituency, and every constituency represented by every Member of Parliament, can only fall. Small businesses simply cannot bear such a burden, and to suggest that they can does no service to future employment in this country.

Mrs. Roche

The amendments are mainly to do with the requirement to keep records, and with related offences.

Before dealing with the amendments specifically, let me explain the context of the Government's approach to enforcement. We devised the provisions broadly on the basis of a number of key principles. The first was effectiveness. Like all hon. Members, we want to ensure that those who flout the law are punished, and that any wrong that has been done is put right. Let me repeat what I have said a number of times in the House and in Committee: we are talking about a very small number of employers. Of course most employers obey the law and will want to comply with the Bill, and I cannot imagine that the Opposition will want to oppose the principle.

Secondly, we have built in flexibility. A number of enforcement routes are provided—enforcement by the individual or by the enforcement officer, enforcement by civil or by criminal proceedings, enforcement through industrial tribunals and enforcement through the courts. We have also allowed for the possibility of conciliation in cases of underpayment, and for such cases to be resolved without a tribunal. That approach avoids heavy-handedness and, I hope, will allow cases to be resolved swiftly and efficiently.

Finally, we have said that we want to consult on regulations under the Bill, including any regulations relating to enforcement—on record keeping, for instance. The feedback that we are getting from business, both large and small, suggests that our approach is broadly welcomed by the business community.

Reference has been made to our approach to small business. I entirely agree that small business is vital to the country's welfare, and I take a close interest in the issue. I think we can say that, in their short life, the current Administration have done a great deal for small business—so much, indeed, that, according to a recent survey, we are now in the political lead in the small business community. Small businesses admire not only our approach to the economy, but every other legislative aim that we have.

Amendment No. 3 is linked with amendment No. 4, which is purely consequential. I understand what the hon. Member for Eastleigh (Mr. Chidgey) was saying, and sympathise with his case, which was echoed by the hon. Member for North Thanet (Mr. Gale). Amendment No. 3, however, is rather prescriptive: it seeks to prescribe the type of records that employers will be required to keep by making sure that records are kept for all workers in all categories. I have every sympathy with the thought behind the amendment.

Of course records should be kept for all types of workers, not just those conforming to the so-called standard pattern of full-time or nine-to-five work. We all know that the workplace is extremely varied, and is becoming even more complex. That is why, although sympathising with the hon. Gentleman's motives, we will ask the House to reject the amendment—if I do not manage to persuade the hon. Gentleman to withdraw it.

Mr. Chidgey

I follow the points that the Minister is making. My speech emphasised my particular concern about the abuse of people attempting to get home work. I would be grateful if she would address that specific point, as well as the main context and thrust of the amendments.

Mrs. Roche

Yes. We are interested to hear the point that the hon. Gentleman raised. I am sure that my hon. Friend the Minster of State would like to discuss the matter with him and that it would be a useful discussion. We deliberately did not make clause 9 prescriptive—rather, it provides the power for the Secretary of State to make the required regulations regarding record keeping. We shall not know exactly what records will be needed until the Government decide the detail of how to implement the national minimum wage in the light of the Low Pay Commission report. As I have said, we want to consult the business community about regulations, particularly on record keeping. It is quite right that the hon. Gentleman wants to make representations and we shall listen carefully.

The regulations will set out the type of records that employers will be required to keep and how long records must be kept. They will also provide differently for different circumstances and descriptions of worker. We chose that direction for very good reasons—to provide time to consider what records should be kept and to give flexibility. We want to avoid imposing unnecessary burdens on business.

Mr. Ian Bruce

Has the Minister considered whether there will be any de minimis requirements? For example, some people employ a cleaner for two or three hours a week. It is a low-pay sector that may concern the Government. Will there be a simple form of record keeping for the single householder who has taken someone on in that way?

Mrs. Roche

Of course we shall ensure that we do not impose unnecessary burdens on business. That is precisely why we chose the route we did and why consultation is important. Indeed, businesses in the hon. Gentleman's constituency may want to participate in that consultation. As I have said already, business has welcomed our approach.

The hon. Member for Runnymede and Weybridge (Mr. Hammond) mentioned home workers and I understand the point that he made. In many, if not all cases, under the employment contract or understanding with the home worker, the employer requires the home worker to keep records.

The Government have already explained that they will be consulting business on all the draft regulations. The recommendations of the Low Pay Commission will also be important, especially regarding the calculation of a worker's hourly rate for minimum wage purposes and the length of the reference period. All those factors will play an important part in determining the exact nature of the records that employers must keep. We believe in consultation and that is why the views of the business community have a key role before specific regulations are decided.

Clause 9, in conjunction with clause 49 which allows for regulations to make different provision for different cases, provides such flexibility. The amendment, on the other hand, is too prescriptive and ought to be rejected.

Amendments Nos. 63 to 65 relate to offences in relation to record keeping and more generally. I said in Committee and again in the House that clause 29, which covers offences, closely follows earlier legislation. As I said in Committee, the Government are not breaking new ground and we are content with the way in which the clause is framed.

Amendment No. 63 would affect subsection (2) of clause 29—the offences clause—which deals with the failure to keep or preserve any record in accordance with the regulations made under clause 9. The amendment would weaken the clause by adding the words, "without good reason". That would allow an employer to rely on having a good reason for failing to comply.

As I said in Committee, we do not expect substantial numbers of criminal prosecutions. However, when there are prosecutions, it will be necessary to prosecute effectively. The hon. Member for Daventry (Mr. Boswell) recognised that. To have good law, enforcement provisions must be as effective as possible. The amendment would change the nature of the offence, making successful prosecution more difficult, because it would be necessary to show that there was no good reason for the breach.

5 am

The amendment would also be inconsistent with earlier legislative treatment of the failure to keep records, which did not allow good reason as a ground for failure to comply. Again, I am referring to section 19(4) of the Wages Act 1986. I made a great deal of reference to that Act in Committee. It does not take a genius to remember that it was enacted under a previous Conservative Administration. I did not notice any great outcry about the criminal sanctions in it.

The provisions in clause 46(4) already provide an employer with a defence in terms of his duty to keep records. If he can prove that he exercised all due diligence and took all reasonable precautions to ensure that he and any person under his control complied with the provisions of the Bill and any regulations made under it, he has a defence against a charge under clause 29(2).

Amendment No. 64 appears to go in the opposite direction from amendment No. 63, making the clause harsher. That would be a great problem for enforcement. It appears to strengthen the clause by adding a provision explicitly covering a person who knowingly fails to disclose any record or information that he knows to be relevant. It would, however, go beyond the equivalent provision in the Wages Act 1986—section 21(1)—on which clause 29(4) is modelled. The Conservatives enacted and supported those measures when in government. We have modelled our provisions on the same legislation, but the Conservatives still object that we are breaking new ground on such offences. Nothing could be further from the truth. The amendment is unnecessary and I ask the House to reject it.

Amendment No. 65 would require the officer investigating a case to be satisfied that all reasonable steps had been taken, by civil proceedings, to satisfy the interests of the worker or workers before proceedings were commenced for any of the offences in clause 29. Under our proposals, criminal proceedings would be a last resort. However, failure to pay the minimum wage is not the only criminal offence. It makes no sense to insist on going through civil procedures for some of the other offences.

We have demonstrated a flexible approach. There are criminal sanctions, but they are a last resort. I ask the House to reject the amendments if they are pursued.

Mr. Chidgey

I have listened to the Minister's arguments; I am very pleased that she has taken seriously the points that I raised and that I will have an opportunity to discuss them with her. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Back to
Forward to