HL Deb 22 July 1986 vol 479 cc123-31

3.17 p.m.

Lord Denham

My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that Her Majesty and His Royal Highness, having been informed of the purport of the Wages Bill, have consented to place their prerogatives and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Bill read a third time.

Clause 2 [Deductions from wages of workers in retail employment on account of cash shortages etc.]:

The Minister of State for Defence Procurement (Lord Trefgarne) moved Amendment No. 1: Page 4, line 3, leave out ("respect of) and insert ("connection with").

The noble Lord said: My Lords, in moving this amendment, I wish to speak at the same time to Amendments Nos. 2 and 3. These amendments are designed to ensure that the category of worker covered by the provisions of Clauses 2 and 3 is clear. There is no policy change involved. The amendments make clear that a worker who is involved in the collection of money in connection with retail transactions from members of the public, fellow workers or other individuals in their personal capacities but who is not involved in the retail transaction itself—that is, their job is not the sale or supply of goods or the supply of services but simply collecting money in respect of sale and supply by someone else—is covered by the provisions of Clauses 2 and 3. I beg to move.

Lord Wedderburn of Charlton

My Lords, we are very grateful to the Minister for his explanation of the amendment. I wonder whether he can possibly answer some queries and difficulties that we have. Little could be more important in the Bill than the definition of retail employment and retail transactions. Unless one falls within that golden area, one is, as a worker, vulnerable to such deductions as one's contract allows—these are workers, as we know from previous debates, whose contract is largely in the hands of the employer—to the full extent of 100 per cent. But if one is in retail one is allowed the limit of 10 per cent. unless it is one's final pay packet when, again, one can have all of it stopped.

The Government have had difficulty with this definition of the area of retail employment since the debates in another place—since 4th March. Mr. Trippier then indicated that the original definition needed amendment when pressed by my honourable and right honourable friends. At the last moment, we now have what seems to us—and perhaps we are wrong—a rather more important amendment than the Minister had indicated. We have not merely those carrying out retail transactions as defined, but also those who are collecting amounts payable in connection with retail transactions either with the public, with other individuals or with fellow workers in individual capacities.

I wonder whether the Minister can clear our minds in relation to this 10 per cent. protection and its ambit. The Government have in every debate placed great stress upon clarity. Indeed, it has been a ground upon which they have rejected almost every amendment we have pressed upon them.

Let us take the simple case of an office with a canteen where the office workers take their tea from the canteen workers and pay their money to the cashiers. The cleaners are all employed by the same employer. Is it the case that the canteen workers who dispense the tea and supply the goods, if not services, to the office workers are retail workers and that the office workers are not? The cashier might not have been, but for this amendment—and I thought perhaps this amendment meant to include the cashier who is collecting amounts in connection with these transactions. Are the cleaners not retail workers unless they help to dispense the tea? The clause provides that they do not have to be doing it regularly, but, whether regular or not, if they have engaged in a retail transaction once or twice that seems to bring them within the provisions.

In the simple example of the works canteen one has the situation where office workers make the payments to the employer via his cashier. The employer of those office workers must make sure that there is a clause in the contract of employment, or written consent, for him to receive the money because this is a payment which appears to be caught by Clause 1(2).

There could be many more difficult scenarios and problems. But if we could be clear that this amendment was meant clearly to bring in the cashier and such people, and that the position is as we understood with regard to the other workers, it might be possible to give advice to people as to what this Bill meant. Does the Minister consider, as it is necessary to amend the vital definition of retail employment on Third Reading, that it might be better to advise employers generally that a 10 per cent. deduction is a better limit and that 10 per cent. should be adhered to in all those examples I have given and indeed many more? That would have been a better clause in the Bill.

Lord Trefgarne

My Lords, I believe that the noble Lord is correct in his understanding. It is true that this amendment has been refined and improved. The 10 per cent. limit applies widely to ensure that the workers are all fully covered. The canteen workers are covered, as are the cashiers. I hope that is the assurance which the noble Lord is seeking and that he will therefore be able to give this amendment a fair wind.

On Question, amendment agreed to.

Lord Trefgarne moved Amendments Nos. 2 and 3:

Page 4, line 7, leave out from ("involving") to ("of") in line 8 and insert ("whether on a regular basis or not)—

(a) the carrying out by the worker").

Page 4, line 11, at end insert (" , or

(b) the collection by the worker of amounts payable in connection with retail transactions carried out by other persons directly with members of the public or with fellow workers or other individuals in their personal capacities; ").

On Question, amendments agreed to.

Clause 4 [Provisions supplementary to ss. 2 and 3].

Lord Wedderburn of Charlton moved Amendment No. 4: Page 6, line 43, at end insert ("in respect of any cash shortage or stock deficiency of which the existence is established by the employer".).

The noble Lord said: My Lords, I rise to move Amendment No. 4, and for convenience I shall speak also to Amendment No. 5, which would make a parallel amendment in a later subsection.

These amendments arise from the drift of your Lordships' debates on previous stages of this Bill which took place on amendments moved by myself and my noble friends Lord McCarthy and Lord Stoddart. The noble Lord, Lord Trefgarne, quite correctly, pointed out that they were technically deficient. That was his kind way of putting it. A little later on he said that they would have a perverse effect. But he was right, and we accepted that. We therefore left the matter until now, when, as is our custom, we are moving much more limited and modest amendments.

The problem arises when a retail worker is dismissed—a retail worker who is not likely to be earning a City salary and whose wage is important week by week to the household. The issue on the final dismissal is that the Bill allows the employer, if the contract covers it—as it so frequently will—to deduct not merely the one-tenth but also the full wage. Time and again we have pressed the Government to refine this clause. We asked the Government to limit it, one would have thought reasonably, to cases where the employer dismissed the worker lawfully. However, they rejected that. We have to accept that. But the employer can dismiss illegally and still deduct the full wage. That is the purport of the Bill. Indeed, as I shall argue in a moment it is the object of the Bill in certain cases.

By sheer chance, this very morning in the law reports in The Times—it is the only newspaper that carries law reports; I would that it were somewhere else—one finds a decision of the Court of Appeal in which all members of the court stress that it is a fundament principle of our law that someone should not be allowed to take advantage from his own default under the contract. Lord Justice Lawton says in this morning's report that the apprentice—because it was an apprentice—should not be allowed to plead his own default in order to establish his right to claim compensation. Here the employer can rely upon his own default, no matter how unlawful the dismissal, and, so long as the contract clause allows it otherwise, deduct the full amount.

We are not challenging that in these amendments, but we say that at least that circumstance is a matter which should make your Lordships at this very last moment consider whether or not this clause is absolutely right.

The effect of these amendments would be to add a tiny condition to the operation of the employer's right under the clause to take the whole wage. The condition would be that there should be not only the consent of the worker in writing, or the clause in the contract, together with the other conditions—the demand for the payment and the other conditions on deduction in Clauses 2 and 3—but, as the amendments say, also that in respect of any cash shortage or stock deficiency the existence should be established of such cash shortage or stock deficiency.

It may puzzle some of your Lordships as to why it is necessary to say that. As the cases in the law reports and other evidence make clear, the reason is that so many of these contract clauses permit the employer to deduct what he says he will deduct without need of proof of the existence of the cash shortage or stock deficiency. In saying that, I do not say that most employers operate to the letter of the law in that respect. But that is a normal clause in retail workers' contracts, and we are dealing with the law and what is permitted and what is not. These amendments would provide far less than we have asked for before. They would add the requirement that the cash shortage or stock deficiency be established. They do not even say "by reasonable measurement" as a previous amendment of ours provided.

That is the first ground for these amendments. But a second ground which I apprehend will be very difficult for the Government to resist—though I am aware that the noble Lord has resources to resist our amendments which are far beyond my capacity to imagine—is the Government's Bill itself.

In regard to another and highly related matter in Clause 2(3), the Bill says that the employer must take certain steps in regard to deductions and to cash shortages not later than 12 months: beginning with the date when the employer established the existence of the shortage or deficiency or (if earlier) the date when he ought reasonably to have done so".

Clause 3(3)(b) makes a parallel provision in regard to payments. In other words, in regard to limitation of action and limitation of claim the Bill itself evisages that the machinery works only where there has been an existing shortage and one which, if he did not know about it, the employer ought reasonably to have known about.

Therefore, that is very different from the contract clauses which exist across the board. It is very different from the clause in the case of Anthony Barratt in the law report, which has figured in our earlier debates, who suffered the arbitrary deductions which were struck down under the present law as being unreason-able by the High Court. That limitation will go and no such protection will exist. In other words, on this second point the amendment asks for no more than the Bill envisages in those other clauses, and therefore the Government are asked to say that, where the right of the employer to deduct all is to come into play, at least there must be what they themselves have called in another part of the same clause the establishment of the deficiency or the shortage. I beg to move.

3.30 p.m.

Lord Rochester

My Lords, I should like to support this amendment. At present there is nothing in the Bill to stop an unscrupulous employer from deducting the entire wage on the last pay day, whatever the circumstances under which the employment is terminated, and whether or not the deduction is fair and reasonable, provided only that the action is covered by the contract of employment.

It is true that an aggrieved employee can take his case to an industrial tribunal; but he will find no remedy there, even though in the extreme case the alleged deficiency or shortage may be a figment of the employer's imagination or greed, or the employee may be dismissed unfairly, spitefully, or unlawfully. I do not pretend for a moment that there will be many such cases; but surely they should not be allowed to occur at all. This amendment would at least ensure that an onus is placed on the employer to establish the existence of a shortage or deficiency before the payment of the entire final wage is withheld. As such, I suggest that it deserves the support of the House.

Lord Trefgarne

My Lords, these amendments are similar to amendments which were tabled by noble Lords opposite during Committee and Report stages, but with one notable difference. The Bill limits deductions on account of cash shortages or stock deficiencies to 10 per cent. of wages, but removes the limit from the final instalment of wages. The amendments would remove the limit from the final instalment of wages only when an employer has established the existence of the cash shortage or stock deficiency in respect of which he has made a deduction or received a payment.

I think that this must reflect the concern of noble Lords during the Report stage over the point made by the National Association of Citizens Advice Bureaux that some unscrupulous employers might make frequent dismissals to recover debts where the 10 per cent. limit is preventing them doing so.

Let me say again that the aim of Clauses 2, 3 and 4 of the Bill is to strike a balance. The Bill simulta-neously ensures that workers are not left with little take-home pay on account of deductions, and also that employers can obtain money to which they are contractually entitled, though by instalments.

By removing the 10 per cent. limit from the final payment of wages, the Bill ensures that whatever is still owing to the employer at the termination of the contract can be offset against the final payment of wages. I should point out that some employers who commented on the proposal for the 10 per cent. limit when it was originally set out in the Department of Employment's consultation paper in 1984, expressed general support but thought it would be unreasonable if the employer had to pay a worker the whole of his final payment of wages when a contract ended and then go to the court for an outstanding debt. The Government thought that this was a reasonable point, and it is for that reason that the limit is not applied to the final payment of wages.

Put another way, the purpose of Clause 4 is to enable employers to recover under contract, and without having to take civil action, amounts which, but for the controls in Clauses 2 and 3, they would have been contractually entitled to recover earlier.

Having said that, the employer is not given an unlimited power under Clause 4 to make deductions from the final instalment of wages. He is still limited by the requirements of Clause 1 that any deduction must be authorised by statute, contract or by prior written consent. He is also limited by the other various safeguards in Clause 1 that ensure that, for example, the worker must be given a copy or explanation of the term of the contract and that the contract cannot be retrospectively varied to authorise deductions.

To add an additional requirement that the employer must establish the existence of the shortage or deficiency—not the amount, but the existence—would not be of any great advantage to the worker. Where a contract allows for deductions on account of cash shortages or stock deficiencies, a deduction must satisfy the requirements of Clause 1 of the Bill, and it follows that a worker who believes that there was no shortage or deficiency and that a breach of contract has taken place will have a right of complaint under the Bill as it stands on the grounds that the deduction was not authorised by the contract. On any such complaint the employer would have to establish the existence of a shortage or deficiency. The only circumstances in which this would not be the case would be where the contract did not require there to be an actual shortage or deficiency. We must take note of the other controls which exist in the Bill, the small number of cases where the problem addressed by this amendment is likely to arise, and the fact that the purpose of Clause 4 is to ensure that employers can recover amounts contractually due to them, and that they would have recovered earlier but for the controls in Clauses 2 and 3, without need to take civil action. Given all this, I believe that the amendments are neither necessary nor desirable.

In general, the combined effect of Clauses 1, 2 and 3 is to establish sufficiently strong controls to protect the worker without tying up the employer in needlessly complicated provisions. For these reasons, I ask the noble Lord to reconsider his amendments.

Lord Wedderburn of Charlton

My Lords, one could reconsider these amendments. They are much too mild, especially after the speech of the Minister. The noble Lord has restated the Bill and he says, for example, that this must go on the record because really the Government cannot get away with a misunderstanding of their own Bill. The noble Lord says that in many cases the worker would have a right to go to the tribunal. Of course that is not so. The noble Lord says that the only case where that would not be so would be where the contract did not provide that the employer had to prove some kind of cash shortage or deficiency. I do not know where the noble Lord has been these past months and years, but that is the ordinary case, especially in retail. In the ordinary case there may be some limitation; but the need to prove the cash shortage or deficiency is just not the normal case, so there is no question about going to the tribunal.

As for protecting the worker—protecting the worker with what, my Lords? The Government say, "with this contract". These are workers who have no bargaining power; we are largely dealing with unorganised workers, with workers who are vulnerable and whose contractual terms are very largely written by the employer. This is the last moment when some kind of justice can be done for people earning £50 or £60 a week, and one simply asks that the employer should be made to prove that the deficiency exists in respect of which he takes the whole wage package from the family in the last week of employment. What does one get? One is told that it would be quite unreasonable to force employers to go to the county court to claim the money which may well be due to them. It is common ground.

Yet what did we get in a previous debate when we asked that employees who were illegally dismissed should have some rights when they were not paid their wages in lieu of notice, for example? We were told in clear terms, "Let them go to the county court". The attitude of the Government is perfectly clear. It is quite clear that the Government of 1896, a Conservative predecessor to this Government, had a better social conscience than this one has in regard to workers who are poorly paid, where the labour market is weak, where their conditions are not strong, and where they are highly vulnerable. Even where the facts, as the noble Lord, Lord Rochester, rightly said, do not really substantiate there even being a deficiency if the contract (as it usually is) is for the employer's right to take the wage, the Government says, "yes, he must do so". That is something on which this House should vote.

3.41 p.m.

On Question, Whether the said amendment (No. 4) shall be agreed to?

Their Lordships divided: Contents, 100; Not-Contents, 121.

DIVISION NO.1
CONTENTS
Addington, L. John-Mackie, L.
Airedale, L. Kagan, L.
Annan, L. Kilmarnock, L.
Ardwick, L. Kings-Norton, L.
Attlee, E. Leatherland, L.
Banks, L. Listowel, E.
Beswick, L. Llewelyn-Davies of Hastoe, B.
Birk, B. Lloyd of Hampstead, L.
Blease, L. Mackie of Benshie, L.
Blyton, L. McNair, L.
Boston of Faversham, L. Mais, L.
Bottomley, L. Milford, L.
Briginshaw, L. Nicol, B.
Brockway, L. Northfield, L.
Bruce of Donington, L. Ogmore, L.
Buckmaster, V. Oram, L.
Burton of Coventry, B. Phillips, B.
Caradon, L. Pitt of Hampstead, L.
Carmichael of Kelvingrove, L. Ponsonby of Shulbrede, L.
Chitnis, L. [Teller]
Cledwyn of Penrhos, L. Prys-Davies, L.
David, B. Rathcreedan, L.
Davies of Penrhys, L. Ritchie of Dundee, L.
Dean of Beswick, L. Robson of Kiddington, B.
Diamond, L. Rochester, L. [Teller.]
Donaldson of Kingsbridge, L. Sainsbury, L.
Dowding, L. Sefton of Garston, L.
Elwyn-Jones, L. Serota, B.
Ennals, L. Shepherd, L.
Ewart-Biggs, B. Silkin of Dulwich, L.
Ezra, L. Simon, V.
Fisher of Rednal, B. Stallard, L.
Fitt, L. Stedman, B.
Foot, L. Stoddart of Swindon, L.
Gallacher, L. Strabolgi, L.
Gladwyn, L. Strauss, L.
Glenamara, L. Taylor of Blackburn, L.
Graham of Edmonton, L. Taylor of Gryfe, L.
Granville of Eye, L. Thurlow, L.
Gregson, L. Tordoff, L.
Grey, E. Underhill, L.
Grimond, L. Wallace of Coslany, L.
Hampton, L. Walston, L.
Hanworth, V. Wedderburn of Charlton, L.
Harris of Greenwich, L. Wells-Pestell, L.
Hatch of Lusby, L. Whaddon, L.
Hughes, L. White, B.
Hunt, L. Wigoder, L.
Irving of Dartford, L. Williams of Elvel, L.
Jacques, L. Ypres, E.
Jenkins of Putney, L.
NOT-CONTENTS
Bauer, L. Cullen of Ashbourne, L.
Belhaven and Stenton, L. Davidson, V.
Bellwin, L. De Freyne, L.
Belstead, L. Denham, L. [Teller.]
Bessborough, E. Denning, L.
Blake, L. Derwent, L.
Boyd-Carpenter, L. Dilhorne, V.
Brabazon of Tara, L. Drumalbyn, L.
Brougham and Vaux, L. Elles, B.
Broxbourne, L. Elliot of Harwood, B.
Butterworth, L. Elliott of Morpeth, L.
Buxton of Alsa, L. Elton, L.
Byron, L. Faithfull, B.
Caithness, E. Forbes, L.
Cameron of Lochbroom, L. Fortescue, E.
Campbell of Alloway, L. Fraser of Kilmorack, L .
Campbell of Croy, L. Gainford, L.
Carnegy of Lour, B. Gardner of Parkes, B.
Carnock, L. Geddes, L.
Cathcart, E. Glanusk, L.
Cayzer, L. Glenarthur, L.
Constantine of Stanmore, L. Gray of Contin, L.
Cork and Orrery, E. Gridley, L.
Grimthorpe, L. Murton of Lindisfarne, L.
Hailsham of Saint Nugent of Guildford, L.
Marylebone, L. Onslow, E.
Halsbury, E. Orr-Ewing, L.
Harmar-Nicholls, L. Peyton of Yeovil, L.
Henderson of Brompton, L. Portland, D.
Hives, L. Quinton, L.
Holderness, L. Rankeillour, L.
Home of the Hirsel, L. Reilly, L.
Hooper, B. Richardson, L.
Hunter of Newington, L. Romney, E.
Hylton-Foster, B. Rugby, L.
Inglewood, L. St. Davids, V.
Kaberry of Adel, L. Saltoun of Abernethy, Ly.
Killearn, L. Sanderson of Bowden, L.
Kimball, L. Sandford, L.
Kinloss, Ly. Sandys, L.
Kintore, E. Seebohm, L.
Knollys, V. Selkirk, E.
Lane-Fox, B. Sempill, Ly.
Lauderdale, E. Shannon, E.
Layton, L. Skelmersdale, L.
Long, V. Somers, L.
Lucas of Chilworth, L. Stanley of Alderley, L.
Lyell, L. Stodart of Leaston, L.
Macleod of Borve, B. Sudeley, L.
Mancroft, L. Swinton, E. [Teller.]
Margadale, L. Thomas of Swynnerton, L.
Marshall of Leeds, L. Todd, L.
Maude of Stratford-upon- Tollemache, L.
Avon, L. Trefgarne, L.
Merrivale, L. Tryon, L.
Mersey, V. Vaux of Harrowden, L.
Middleton, L. Vickers, B.
Milverton, L. Vivian, L.
Montgomery of Alamein, V. Whitelaw, V.
Mottistone, L. Young, B.
Mowbray and Stourton, L. Young of Graffham, L.
Munster, E.

Resolved in the negative, and amendment disagreed to accordingly.

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