HC Deb 08 July 2002 vol 388 cc609-14

Lords amendment: No. 1.

3.34 pm
The Minister for Employment Relations, Industry and the Regions (Alan Johnson)

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

In Committee, the hon. Member for Runnymede and Weybridge (Mr. Hammond) voiced concern that the Bill as drafted may not clearly give effect to our policy intention on an employer's liability to pay paternity pay to an employee in certain circumstances. Such circumstances were those in which an employee leaves his employer's employment at some point before the child is born, or placed in the case of adoption.

I undertook at the time to examine clause 2 closely to ascertain whether any amendments were needed to give effect to our policy intention in that regard. I do not think that there was or is any disagreement about the fundamental policy intention—that is, that it would not be right for an employer to be liable for payment of paternity pay to an ex-employee who had left his or her employment some time ago. However, the hon. Member for Runnymede and Weybridge made a valid point, and we agree that the Bill as drafted did not set out the policy unambiguously.

The hon. Gentleman will have noted that our package of amendments subsumes some of those that he suggested in Committee, but that, to give full effect and ensure consistency throughout the Bill, they are somewhat more comprehensive. We tabled this group of amendments in the other place, and I can assure the hon. Gentleman that they make it crystal clear in the Bill that an employee will be entitled to statutory paternity pay from an employer only if he or she is working for that employer up to the date of birth or placement of the child, and not if he or she has left that employer's employment at some point beforehand.

Amendment No. 22 stands slightly apart and simply tidies up part of new section 171ZE to ensure greater consistency with statutory maternity pay and statutory adoption pay.

Mr. Philip Hammond (Runnymede and Weybridge)

I am grateful to the Minister for his remarks so far. He is right that this set of amendments clarifies beyond doubt the aim of the Bill. The concerns expressed in Committee arose because the language used in drafting the Bill had been picked up from other legislation dealing with statutory maternity pay.

Statutory maternity pay covers a considerably longer period than that proposed for statutory paternity pay, and some of the expressions used in the original drafting language implying that a person who went on statutory leave had ceased their employment might be appropriate phraseology where the person will be away from the workplace for a period of months, but members on both sides of the Committee, including the Minister, felt that the wording was not appropriate if the person is to be absent from the workplace for a maximum of two weeks. The Minister said at the time that he would study the wording carefully and ensure that what was written into the Bill did indeed give effect to the policy intention, about which there was never any doubt in anybody's mind.

That is a good example of the way in which consideration in Committee often throws up valuable insights into drafting. The draftsman clearly understood what he was being asked to do, and for understandable reasons modelled the wording on that for the statutory maternity pay regime, but it was evident to those of us who were not involved in the drafting process and who were reading the Bill as laymen that there was the possibility of misinterpretation of the language used in the clause. I am pleased to say that the amendments tabled by the Government in the other place, which went rather farther than the amendments proposed by the Opposition in Committee, clarify eligibility in relation to former employment and leave anyone who reads the Bill in no doubt about the intention.

Graciously acknowledging the validity of the points that we had raised, the Minister said in Committee that, having considered the matter, we will either table the hon. Gentleman's amendment"— that is, my amendment— giving him the credit and royalties that he deserves, or a similar amendment that will clarify what we are saying."—[Official Report, Standing Committee F, 10 January 2002; c. 328.] The Minister is generous in the extreme, but I have to tell him that no brown envelope has yet come winging its way to me with any royalties.

Alan Johnson

Blame the post.

Mr. Hammond

The Minister anticipates the remark that I was about to make. He is, of course, an expert on these matters, and with or without credit and royalties, I am delighted that we have resolved the issue.

However, a second substantive point arises from this group of amendments. I will call it the motive test. One of the amendments deletes subsection (2)(c) of new section 171ZA to the Social Security Contributions and Benefits Act 1992, which stated: that he has ceased to work for the employer, and done so for the purpose of caring for the child or supporting the mother". The same provision is deleted in relation to birth and adoption entitlements. Clearly, the primary reason for such deletion is that the reference to ceasing to work for the employer is no longer relevant as a result of the substantive amendments in the group, to which the Minister referred. On the face of it, however, that leaves us without a motive test. It was always intended that paternity pay would be payable only where the purpose of taking the leave was caring for the child or supporting the mother in the case of birth, and caring for the child or supporting the adopter in the case of adoption.

The amendments provide an alternative method of introducing a motive test, but they include it in a different provision: new section 171ZE to the Social Security Contributions and Benefits Act 1992, which deals with rate and period of pay. It seems that we are being asked to delete the concept of a motive from the definition of entitlement and to put the motive test back into the new section that deals with the rate and period of pay. As I understand it, the effect is that under new section 171ZA—and, indeed, under new section 171ZB in relation to adoption—somebody could be entitled to maternity pay, but might not receive it because section 171ZE reintroduces the concept of a motive test at the point at which payment is dealt with.

Has the Minister thought through the question whether there are any implications of moving the motive test from the sections dealing with entitlement and including it instead in new section 171ZE? The provision could have been left where it was; there is no reason at all why the motive test could not have remained in new sections 171ZA and 171ZB. Presumably, somebody has taken a conscious decision to reinsert it in a different place, and before we decide how to proceed, I would like to be sure that that has no significance.

While we are dealing with these amendments, perhaps we could again touch on the issue of policing and enforcement, about which we had a little discussion in Committee. Clearly, new section 171ZE includes a motive test that will apply before payment is to be made. I am concerned to ensure that employers are not required to police the test and make what could be very difficult subjective judgments about whether the employee intends to care for the child, mother or adopter in taking statutory leave and receiving statutory pay.

In particular, will the Minister explain how he intends to ensure compliance with that motive test? For example, will a self-certification requirement be included in regulation, so that an employee who announces his intention to take statutory paternity leave and asks his employer to pay statutory paternity pay will make some form of simple declaration to the employer to the effect that he intends during the course of that leave to care for the child, mother or adopter? In those circumstances, I would imagine that the employer would be exonerated if it turned out that the employee had gone on a fortnight's holiday to Las Vegas during the period of statutory paternity leave. Any redress against the individual would be a matter between the Inland Revenue as the reimbursing authority and the person taking the statutory leave and receiving the statutory pay.

3.45 pm

I hope that it is clear that the Government are not seeking to place employers in the invidious position of having to delve into the personal living and family support arrangements of their employees. There must be some arrangement whereby the employer can be clear as to the course of action that he has to follow, without any risk of redress, or of finding that the Inland Revenue has refused to reimburse an amount that he has paid in good faith following an employee taking statutory paternity leave, on the ground that the employee did not satisfy the motive test now being removed from the new section.

I would be grateful if the Minister could deal with those questions. Then we can see how to proceed.

Alan Johnson

Apart from the royalties question, I did give due credit to the hon. Member for Runnymede and Weybridge. It was an exemplary Committee in the way in which various items were raised. It was scrutiny at its best—[Interruption.] "Hear, hear" say members of that Committee.

The hon. Gentleman raised the point about the motive test. As he mentioned, amendment No. 21 seeks to ensure that pay, like leave, should be available only where the employee has taken time off work for the purpose of supporting the mother or caring for the child, which would otherwise have been lost from the drafting. That provision is reinstated in the new section relating to the rate and period of pay. It would be unusual for someone to seek to take two weeks off work and not seek to be paid for those two weeks. We have looked at this very carefully and we are confident that the change does not lose the important point that we were trying to preserve: there has to be a genuine motive for taking the leave.

On the issue of self-certification, we do not believe that this is different from any other form of leave. Employers should not be asked to delve into the private concerns of their employees; it was an important principle that we established. Would someone claim for two weeks paternity leave and take that two weeks in Las Vegas? That it is unlikely. Even when we have finished applying the biggest increase in maternity leave, which is mirrored in paternity leave and maternity pay, since 1948, paternity leave will still be up to the grand total of £100 a week.

It is unlikely that someone would seek to use paternity leave to holiday in Nevada. Nevertheless, if they do try to do that, it will be a matter for the employer to deal with in the normal way—as a disciplinary matter. People who seek to take other forms of leave when they are misleading the employer are in the same position.

Mr. Hammond

The Minister says that it would be a matter for the employer to deal with as a disciplinary issue, but to the extent that the employer is being reimbursed by the Inland Revenue, it strikes me that it is more a question of fraud against the Revenue than a matter of direct economic concern to the employer. Is the Minister saying that it will be left entirely to the employer to police the provision and to take any necessary action?

Alan Johnson

No, I am not. I am saying that, in terms of the checks that are carried out, if an employer obtains evidence of an employee taking leave in a way that is not covered by the Bill, it would be a disciplinary matter for the employer to deal with. The Inland Revenue, on the other hand, would use the cruel and unusual punishments that are open to it to pursue an individual along those lines. I am not saying what the hon. Gentleman suggested at all.

Mr. Mark Prisk (Hertford and Stortford)

There will clearly be a transfer of money in terms of payments. Has the Minister made a regulatory impact assessment of the administrative costs to businesses—particularly small businesses—of the changes?

Alan Johnson

The hon. Gentleman returns to a theme that we know well from Committee. I remind him that the response from small businesses was overwhelmingly positive in respect of adoption leave, to which the provisions also apply, because an adoptive parent can take two weeks paternity leave. In fact, their biggest single comment was that this should have happened a long time ago. On paternity leave, there was complete acceptance that it was right that fathers should have time to spend with their new-born babies. The basic point that businesses made was that they should not be expected to pay paternity leave. They also made the point that the Government should expand the number of small businesses that would be able to claim back 105 per cent. of maternity and paternity pay—the two rules are mirrored. We have taken into account the views of small businesses in all those respects.

Mr. Prisk

My question was on administrative costs, not on the pay itself. I understand what the Minister has said on that point, and I share those motivations, but I am seeking an answer on the costs and administrative burdens now being put before the House that have come from the other place.

Alan Johnson

On the amendments carried in the Lords, we are doing precisely what the hon. Member for Runnymede and Weybridge asked us to do, which is to make it absolutely clear that when individuals take such leave, the only responsibility that the employer will have will be for existing employees. There was some ambiguity in the previous wording, but small businesses will welcome the changes.

Mr. Hammond

The Minister has just referred to employers being able to recover 105 per cent. of the amounts paid to employees. For the avoidance of any ambiguity, will he confirm for the record that that is 105 per cent. of the amount paid, to include the employer's national insurance contribution, so that it will, in fact, be less than 100 per cent. of the cost to the employer that is being recovered?

Alan Johnson

Yes, I confirm that. It will work out at about 104 per cent. when the complex statistics are taken into account.

I thank the hon. Member for Runnymede and Weybridge for recognising that we have sought carefully to take his views into account and incorporate them into the amendments. He should be reassured by the fact that our moving the provision on motivation from amendment No. 21 to another part of the Bill still secures the basis of that motivation.

Mr. Hammond

As the Minister is obviously about to finish, may I ask him specifically to give an assurance that an employer acting in good faith making a payment of statutory paternity pay will not find himself unable to get reimbursement because the Revenue has determined that the employee does not satisfy the motive test now being inserted into new section 171ZE?

Alan Johnson

If the hon. Gentleman will forgive me, I will not give him an answer now; I will look into the matter to make sure that that is the case, and I will write to him.

Lords amendment agreed to. [Special Entry.]

Lords amendments Nos. 2 to 24 agreed to. [Some with Special Entry.]

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