§ Mr. Ian McCartney
I beg to move amendment No. 5, in page 14, line 37, at end insert'or(c) the worker qualifies, or will qualify, for the national minimum wage or for a particular rate of national minimum wage.'.
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
With this, it will be convenient to take Government amendments Nos. 6 to 8, 24, 25, 9, 10, 26, 11, 35 and 12.
§ Mr. McCartney
The substantial amendments in this group are Government amendments Nos. 6 to 12 and 35, which ensure that it will not be possible for an employer to dismiss an employee who is not yet eligible for the national minimum wage but is soon to become so because of their age. That is the general purpose, but before I go any further I must make one point clear from the outset—no decision has yet been taken on whether there will be any exemptions or different rates using the powers in clauses 3 and 4.
The Low Pay Commission has been asked to consider the matter. It will be report in May on whether, and if so how, the powers in the Bill should be used. I say that now 227 to spare Conservative Members' leaping to their feet to claim that the amendments presuppose any decisions on that. They do not. They are just in case, and I shall explain why they are so important. If—and I stress if—different rates are set for some young workers, below the rate of the full national minimum wage, some unscrupulous employers might consider sacking the young workers the day before they reach their entitlement to the full rate, or to a higher rate. I do not wish to imply that that would happen frequently—I am fully aware that the vast majority of employers are responsible and behave ethically—but we know from bitter experience that some employers will resort to such tactics, and the amendments would stop them.
The amendments have two further, related, effects. They cover a situation in which a worker might suffer because he has already reached an entitlement to the national minimum wage, or an entitlement to a higher rate, as well as when he is about to do so. They also provide protection for a worker if there is a general uprating or change to the rates which could lead to an employer taking action against a worker.
The amendments are all related and work in the following way. Government amendments Nos. 5 and 6 relate to clause 21. They extend the protection of all workers from detrimental action to include those who are not at present eligible for the national minimum wage, but who will become eligible in the future. Without the amendments, there would be nothing to stop an employer taking action against a worker, such as terminating the contract of a worker who is not an employee on the ground that the worker is soon to be eligible for a higher minimum rate.
Government amendments Nos. 7 and 8 make the equivalent changes to clause 23, and Government amendments Nos. 9 and 10 make the equivalent changes to clause 24 for Northern Ireland. Those clauses protect employees from unfair dismissal. Hon. Members will appreciate that workers who are not employees do not have the relevant contractual arrangement and cannot therefore be dismissed—they will use the protection from detriment in clause 21. The amendments extend the scope of the clauses, making a dismissal unfair if the reason for it is that the employee would become entitled to the full national minimum wage or to a higher rate.
Government amendments Nos. 11 and 12 apply the protection to agricultural workers under the agricultural wages regime. They amend the Agricultural Wages Act 1948, the Agricultural Wages (Scotland) Act 1949, and the Agricultural Wages (Regulation) (Northern Ireland) Order 1977. The amendments extend the meaning, in the Employment Rights Act 1996, of any reference to a person qualifying for the national minimum wage so that it includes reference to a person who has become, or will become, entitled to a minimum rate under the agricultural legislation mentioned. That is done by adding to the enforcement provisions in that legislation.
I ask the House to support the amendments, which add an extra element of protection and improve the Bill as a result.
§ Mr. Ian Bruce
When the national minimum wage is introduced, some workers will be paid less than the rate at which it is set. Will an employer be liable to prosecution if he claims that he can afford to pay fewer workers and, before the introduction of the national minimum wage, downsizes his company?
§ Mr. McCartney
I have made the response to that point clear. It would be unfair dismissal to sack someone for claiming the right to the national minimum wage. A worker should also not suffer dismissal or other detriment for claiming that another worker is entitled to the national minimum wage. It would be unfair and a detriment for an employer to take action against his employees on the ground that they were seeking a right under the Bill. That has always been the position. We are moving the amendments to ensure that another detriment does not happen if the Low Pay Commission recommends and the Government accept different rates for younger workers. We want to ensure that when people reach entitlement to the minimum wage they are not sacked solely for claiming it.
As with all rights relating to unfair dismissal and to detriment, the courts will determine whether the worker has a case in the light of evidence presented to it from both sides. If a worker is dismissed for good reason, the employer has nothing to fear. To challenge the principle of protecting workers from dismissal on these grounds is to challenge the principle of the national minimum wage. We are back to the age-old and long-discredited argument that a minimum wage leads to huge lay-offs. That was the point made by the hon. Member for South Dorset (Mr. Bruce); Conservative Members have constantly claimed that a minimum wage will cost jobs.
We argue, and all the evidence suggests, that a minimum wage set at a sensible level taking account of economic circumstances will not lead to that scenario. We believe in a national minimum wage. Set at a sensible level, it will not cause difficult problems.
§ Mr. McCartney
The hon. Gentleman asks what is a sensible level. Is not the objective that we set the Low Pay Commission to make recommendations on such matters?
§ Mr. Hammond
Is a sensible level, as suggested by the financial memorandum to the Bill, one that will not affect at all the level of employment in the economy? If so, why did the Secretary of State not specifically give the Low Pay Commission the task of setting a level that would not affect employment at all?
§ Mr. McCartney
The commission was given a wide reference, including taking account of economic circumstances. It is made up of individuals with close investment in all sections of the labour market and with skills and knowledge of it. It has taken considerable evidence across the United Kingdom to come to its conclusions. Having been given that wide remit, it will produce recommendations on the rate and related matters. The hon. Gentleman will have to wait a few more weeks for them to be placed before the Government and the nation.
229 There can be no justification for dismissing workers only because they have become entitled to the minimum wage. That would be extremely short-sighted and wrong. The worker must be protected from such action.
Amendments Nos. 24 to 26 are tidying-up amendments. They do not change the Bill's intended meaning or effect. Amendment No. 24 relates to subsection (3) in the new section 104A that clause 23(1) inserts into the Employment Rights Act 1996, making the dismissal of an employee for asserting rights under the National Minimum Wage Bill automatically unfair in Great Britain.
The amended text makes it clear that the right to which section 104A applies isany right conferred by or by virtue of any provision of the National Minimum Wage Act 1998.The addition of the formulation "by virtue of reflects the Bill's extension to agricultural workers in Great Britain of automatic protection against unfair dismissal for asserting rights that those workers do not have directly under the Bill but which are given to them by virtue of the Bill.
Amendment No. 26 makes the same tidying-up change in relation to automatic protection against unfair dismissal for asserting rights conferred on agricultural workers in Northern Ireland by virtue of the Bill.
Amendment No. 25 is consequential on the Employment Rights (Dispute Resolution) Bill. As those who attended the many hours in Standing Committee D know, a great many Government amendments were tabled to bring the National Minimum Wage Bill into line with changes being made to the industrial tribunal system, soon to be known as the employment tribunal system, through that Bill. It is a Lords private Member's Bill with cross-party support. The amendments have not therefore been contentious.
Unfortunately, a further change is needed as a consequence of the Employment Rights (Dispute Resolution) Bill but we did not spot it in time to table it in Committee, for which I apologise. It relates to clause 23, which deals with protection from unfair dismissal. Subsection (5) inserted a new subsection into the Employment Rights Act 1996 ensuring that the right not to be dismissed for enforcing a right under the National Minimum Wage Bill will be one of those rights that applies regardless of whether a statutory dismissal procedures agreement applies to the employee. However, clause 12 of the Employment Rights (Dispute Resolution) Bill will make clause 23(5) of this Bill unnecessary because it amends the relevant section of the 1996 Act so that there will no longer be statutory exclusions for the dismissal procedures agreement and therefore no need to specify that national minimum wage rights are outside those exclusions. The situation will depend on whether the dismissal procedures agreement itself excludes dismissals of a particular description.
I hope that I have been able to set out in some detail, albeit without spending too much time on them, the reasons for the amendments. I also hope that hon. Members on both sides of the House will recognise the need to ensure that, where unscrupulous action is taken, the Bill protects employees claiming the right to the national minimum wage.
§ Mr. Boswell
First, I thank the Minister for his lucid and concise explanation of this large and complex group 230 of amendments. I shall not trade numbers with him, because it is important that the Bill be got right; nor would I wish to signal from these Benches any departure from the principle of good employment that he has set out. I can understand where he is getting to—indeed, I am slightly surprised that he did not get there before—in requiring through the substantive amendments that employers should not sack people in contemplation of their qualifying for the national minimum wage.
The difficulty is that the Bill must operate in the real world, where not all employers are as scrupulous as the Minister and I would like and where many, whether scrupulous or not, will be facing undoubted economic pressure. I make no predictions about whether there will be a separate rate for young persons, but it should be noted that employers may be tempted to find ways to cut the costs of their labour force and may not wish to employ workers at the full rate—at whatever age that happens to cut in. If employers are in difficulties, their recourse may well be not to employ such persons at all if there is any realistic risk of their eventually qualifying for the full rate. That is but another subset of the concerns that we have expressed extensively about the danger that, whatever rate is set, we may see a higher level of unemployment than might otherwise have happened. However, as the Minister has rightly said, that is a function of the rate that is likely to be chosen.
I have one specific issue on which I should like to probe the Minister. It concerns employees below a qualifying age who may eventually reach a qualifying age for the national minimum wage—I do not anticipate whether there is to be a youth rate—and whose contracts of employment are for a fixed term. As I understand employment law on unfair dismissal, if an employee is employed for a fixed term and that employment is not renewed at the end of the fixed term, that would not normally give rise to a claim for unfair dismissal unless there had been a specific agreement between employer and employee during the contract or, more typically, at the beginning of the contract, that that particular term should be disapplied. Will the Minister confirm, either now or later, whether fixed-term contracts that are keyed to an expiry date just before the qualifying date for the national minimum wage and accompanied by an agreement between employer and employee not to apply the unfair dismissal procedures would be allowed? That is a small point, but an important one in terms of the tidiness of the Bill.
§ Mr. McCartney
I thank the hon. Gentleman for the way in which he has responded. The issue he raises is technical, albeit one worth making. A range of issues surround what constitutes a contract, short term or otherwise. The arrangement in the Bill is an attempt to ensure that, where there is consistency of employment, that consistency is not disturbed solely on the ground of an employee reaching an entitlement to a national minimum wage. However, in the same spirit as the hon. Gentleman raises the matter, I undertake to write to him with a detailed legal explanation of the point he raises.
§ Amendment agreed to.
Amendment made: No. 6, in page 14, line 38, after 'of' insert
'paragraph (a) or (b) of'.—[Mr. Ian McCartney.]