Lords Sitting of 24 June 1986

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Saint Albans.

Severn Estuary Barrage Study
Lord Sandys: My Lords I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the latest position on the River Severn barrage project, and when their response to the report on the project is due to be announced.
Lord Brabazon of Tara: My Lords, Her Majesty's Government have recently received the report of the Severn Tidal Power Group which has been engaged for the last two to three years in a study, partly funded by Government, to assess the viability of a private sector barrage across the Severn estuary. The report is comprehensive and detailed. Consultations are taking place with the Severn Tidal Group and other interested parties before a response can be made.
Lord Sandys: My Lords, while I thank my noble friend for that interesting Answer, can he assure the House that it is still the Government's view that the potential of the Severn's tidal power is as great as any in the world and indeed greater than the project brought to a successful conclusion at La Rance in France?
Lord Brabazon of Tara: My Lords, yes, indeed. This is potentially the second largest tidal barrage in the world and is certainly larger than that in France. There is one in Nova Scotia which is presently the largest, but this would be the second largest in the world.
Lord McNair: My Lords, can the noble Lord tell me whether the report which the Government have received refers to the shorter barrage or the longer one from Weston-super-Mare?
Lord Brabazon of Tara: My Lords, this would be the near-Weston-super-Mare to near-Cardiff barrage.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that it is generally agreed that this is a very important project? Does he recall that in another place on 18th April his honourable friend in answer to a question from Mr. David Mudd, said that the report would be published shortly? It is now 24th June, nine weeks later. Can the noble Lord say when we are likely to see the publication of the report, and will a copy be placed in the Library?
Lord Brabazon of Tara: My Lords, I am afraid that my answer is still "shortly", but I hope that the period will be shorter than the one mentioned the last time such a question was asked. I shall indeed ensure that a copy of the report is placed in the Library.
Lord Cledwyn of Penrhos: My Lords, perhaps I may follow up my noble friend's question and the noble Lord's reference to "shortly". Does the noble Lord recall that four-and-a-half years ago, in February. 1982, we had a debate in this House on the Bondi Report and his noble predecessor, on winding-up that debate, said, if I recall, that the Government would shortly be reporting after they had considered the issues? How long does it take for this Government to make up their mind—four-and-a-half years? In view of the great concern and interest in Wales in this project and the high unemployment in the Principality, and bearing in mind that it is thought that if this project were put in hand, it would provide several thousand jobs, will the noble Lord be a little more specific and be good enough to accelerate the response to the report?
Lord Brabazon of Tara: My Lords, in fact I do not think that the noble Lord will have long to wait. Following the publication of the Bondi Report, the Government promoted the Severn Tidal Power Group's report, which was half-funded by the Government. Originally the group was expected to report within two years. In fact, the report was published in May, 1983; so it has taken slightly over three years. However, one must remember that it is an extremely large project and, as the noble Lord, Lord Cledwyn, said, very substantial job opportunities are linked to it.
Lord Sandys: My Lords, does my noble friend agree that hydrologists and engineers have been working on this since the first design in 1849?
Lord Brabazon of Tara: My Lords, I am sure that my noble friend is right, but I am afraid that my memory does not take me back quite that far.
Lord Underhill: My Lords, does the noble Lord appreciate that this matter has many facets? Therefore perhaps he will forgive a third member of the Opposition Front Bench asking a question. My question has transport connections. As a review concerning a second Severn crossing is under consideration, have the two groups been liaising?
Lord Brabazon of Tara: My Lords, the report produced by the Severn Tidal Power Group will concentrate on the energy-producing aspects. However, in their response the Government will have to take into account not only that but the environ-mental impact on the area, plus of course the possibility of a road crossing, which is what I think the noble Lord, Lord Underhill, was referring to, and also of course the possible effects upon recreation and tourism.
Lord Moran: My Lords, will the Government satisfy themselves that, if this barrage is built, migratory fish going up or down the Rivers Severn and Wye will be able to pass through the barrage without excessive loss, and that consequently there will not be severe losses to the stocks in those and other rivers?
Lord Brabazon of Tara: My Lords, I am sure that that is one of the matters which will be taken into consideration.

ILEA Teaching Pack
2.43 p.m.
Lord Harris of Greenwich: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what response they have received from the Inner London Education Authority to the letter from the Department of Education and Science concerning the teaching pack Auschwitz: Yesterday's Racism.
The Earl of Swinton: My Lords, as my noble friend Lady Hooper said in a Written Reply to the noble Lord on 3rd June 1986, the authority accepts that parts of the teachers' guide to the pack are inappropriate and has undertaken to revise them.
Lord Harris of Greenwich: My Lords, I thank the noble Earl for that reply. Given the deplorable nature of this particular piece of propaganda, relating, as it did, to the death of many millions of Jew in concentration camps, to the Prevention of Terrorism Act, and the dispute over GCHQ, may I ask him whether the Inner London Eucation Authority has now agreed to withdraw this teaching pack from schools pending the revisions which I understand are now being made to it?
The Earl of Swinton: My Lords, I understand that ILEA has said that it will not issue any more copies of the pack until the text has been revised. The department has written to the authority suggesting that the pack be withdrawn meanwhile if the necessary amendments cannot be made quickly, and the reply to that has yet to be received.
Lord Orr-Ewing: My Lords, can my noble friend go a little further and say that this pack is so monstrous that it should be withdrawn? It is not a question of not issuing any more. If you have sinned and been found out, you should be redeemed by withdrawing all the copies which now exists in our schools.
The Earl of Swinton: Yes, my Lords; I agree entirely with my noble friend that this pack is monstrous, and that is why the department has written to the authority suggesting that the pack be withdrawn.
Lord Harris of Greenwich: My Lords, if the noble Earl or the department do not receive a reply very soon indeed from the Inner London Education Authority, can we take it that the Secretary of State will make it clear that he expects this guide to be withdrawn forthwith, and that if it is not he will consider what other steps to take?
The Earl of Swinton: My Lords, I think that the noble Lord would have me answer a hypothetical question. It would not be right to do so because matters are not helped by conjecture, and the Government in fact decide their actions on the basis of the circumstances of an actual case. They would need to know, for example, if matters fell out as the noble Lord's question implies, why it was that ILEA has decided to act in that way. What I can say, though, is
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that in such an event we would scrutinise very carefully indeed the circumstances of the case and the authority's reasons. I can also add that if we do not receive a reply in the very near future we shall be taking up the matter again with ILEA.
Lord Taylor of Blackburn: My Lords, is the Minister aware that this is not the same authority to which the letter originally went? Since the original letter was sent there has been an election and a new authority has been elected. Will the noble Earl give it time to settle in first?
The Earl of Swinton: My Lords, the letter went on 29th May. As I understand it, even if elections take place it is still the same authority, though the personalities may have changed. We have given it a lot of time. By the same expression, we do not expect it to take very much longer to answer.
Viscount Trenchard: My Lords, my noble friend has answered the question I was going to ask, which was the date at which the department had written to the Inner London Education Authority. In view of the fact that no reply has been received, how much longer is my noble friend going to wait before taking further action? Would he not agree that his last but one answer was worthy of the very best of Sir Humphrey Appleby?
The Earl of Swinton: My Lords, I should be delighted to be compared with Sir Humphrey. The answer to my noble friend's question is: not very much longer.
Lord Elwyn-Jones: My Lords, would it be possible for a copy to be put in the Library of the House? The word "Auschwitz" has terrible memories for so many of us.
The Earl of Swinton: My Lords, I am not quite sure what the noble and learned Lord is asking for a copy of.
Lord Elwyn-Jones: My Lords, a copy of the document which has now been the subject of question-ing for the past 10 minutes.
The Earl of Swinton: My Lords, I shall undertake to the noble and learned Lord and other noble Lords to have that placed in the Library forthwith, but I think it may horrify some of your Lordships.
Lord Elwyn-Jones: My Lords, I did not mean to be discourteous to the noble Earl. We are old friends.
Lord Mulley: My Lords, without intervening on the merits of this case may I ask the noble Earl the Minister to at least bear in mind the limited powers that the Secretary of State has in all these matters? When I was involved in a dispute with a local authority which six weeks after an election had not met to elect its chairman, I was turned down by the House of Lords for wrongfully interfering with that local authority.
The Earl of Swinton: My Lords, the noble Lord is not the first person to have had trouble with this noble House.
Lord Harris of Greenwich: My Lords, would the noble Earl agree that as well as putting the original document in the Library he will also put the revised text into the Library at the same time?
The Earl of Swinton: My Lords, I undertake that when it is produced, that will be done.

School Expeditions: Safety Procedures
2.48 p.m.
Baroness Sharples: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in the light of the Land's End tragedy in 1985, advice is being given by the Department of Education and Science to schools to help improve safety procedures during school visits and expeditions.
The Earl of Swinton: My Lords, in March of this year the Department of Education and Science issued a bulletin (Safety in Education Bulletin No. 4) to local education authorities and to schools, containing general guidance to all involved with the organisation of outdoor pursuits and school expeditions. The bulletin supplemented previous departmental guidance on the subject and in particular drew on lessons arising from the Land's End tragedy.
Baroness Sharpies: My Lords, I thank my noble friend for that reply, and I congratulate his department on this extremely good bulletin. Will my noble friend please assure the House that expeditions and visits have not been restricted since this disaster last year? Will he also tell us whether all schools have received this bulletin?
The Earl of Swinton: My Lords, I am glad to say that I think that schools continue to produce a number of educational and outdoor expeditions. I understand that the numbers are not in fact falling off. Copies of the bulletin have been distributed widely through LEAs and other education bodies who are free to reprint the guidance to schools and colleges without copyright restriction. I cannot answer my noble friend as to whether every school in England and Wales has received a copy of it.
Baroness Masham of Ilton: My Lords, does my noble kinsman agree that it would be most useful if the teachers and children in all schools had first aid classes, especially before undertaking expeditions?
The Earl of Swinton: My Lords, I think that that would be a good thing. In fact Her Majesty's inspectors and the department concentrate on getting the right advice out to schools to see that these awful accidents do not take place so that first aid is not necessary.

Test Ban Treaty: Soviet Offer
2.50p.m.
Lord Jenkins of Putney: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
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The Question was as follows:
To ask Her Majesty's Government why they have not accepted Mr. Gorbachev's offer to agree to verification by seismic monitoring stations inside the Soviet Union as part of a comprehensive test ban treaty.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, the qualified nature of such offers would not provide adequate levels of verification for a comprehensive test ban treaty.
Lord Jenkins of Putney: My Lords, while I thank the noble Baroness for that Answer may I ask her why the Government have not pursued the matter further? Why did they block all measures and all proposals to move towards negotiations in Geneva? Why did they even block an Australian compromise proposal that a draft should be drawn up to outline the objective negotiation? Why do the Government apparently not want to discuss this subject? Is the position really that they do not want a comprehensive test ban?
Baroness Young: No, my Lords, that is not the position. I have made clear on this occasion and on many others in your Lordships' House that the crucial question is one of verification.
Lord Mellish: My Lords, will the Minister be good enough to reaffirm that last July the Government put forward proposals for verification? I should like to know what the Soviet reaction was to that? What have the Soviets done about our proposals?
Baroness Young: My Lords, I am grateful to the noble Lord, Lord Mellish, for raising that point because last July the United States proposed an exchange of test site observers and invited Soviet observers to visit a United States test site. This goes to the heart of the issue, which is verification, and it is a matter of much regret that the Soviet response so far has been dismissive.
Lord Mayhew: My Lords, does the noble Baroness recall her reply to a recent parliamentary Question—that if negotiations were to be resumed, questions other than concerns over verification would need to be addressed? Will she say what these other questions are and whether they include the need of the American or British Governments to make further tests?
Baroness Young: My Lords, I recall the Question that the noble Lord asked a little while ago. The other matters which would have to be dealt with are scope, duration and compliance; but the key issue is verification.
Lord Cledwyn of Penrhos: My Lords, will the noble Baroness agree that international scientific advice is that verification techniques are now extremely accurate? Secondly, will she confirm what I thought she said before—that a comprehensive test ban treaty is one of the Government's clear objectives?
Baroness Young: My Lords, we should like to see a comprehensive test ban treaty. With regard to the question of verification and recent scientific advances, to which the noble Lord referred, and indeed the claims that verification is not a problem, particularly in the light of advances in seismology, the Government do not agree, and we do not believe that the recent arguments advanced invalidate the conclusions of a United Kingdom paper presented to the Conference on Disarmament in July 1985. For example, these arguments concentrate largely on detection, ignoring problems of discriminating between explosion and earthquake.
Lord Mellish: My Lords, will the noble Baroness say whether the Soviet Union gave any reasons why they did not take any action or refused to consider our proposals of last July?
Baroness Young: My Lords, they have not indicated their reasons.
Lord Mayhew: My Lords, may I ask the noble Baroness to clarify her reply to me just now? Was she saying that questions other than verification, which would need to be addressed if negotiations were resumed, would not include the need of the United States or British Governments to make further tests?
Baroness Young: My Lords, what I said to the noble Lord on the question that he asked me about other issues that have to be raised besides verification on a test ban treaty related to difficult questions such as the scope of the treaty, its duration and its compliance. But the key issue is verification.
On the other point that the noble Lord asked about concerning testing—he has asked about it several times—we are committed to making progress. We are committed to maintaining the effectiveness of our nuclear capabilities; but it is a hypothetical question at the present time to ask what would happen under a test ban treaty.
Lord Jenkins of Putney: My Lords, but the question remains: why are the Government even refusing to examine the Soviet proposals for on-site seismic verification?
Baroness Young: My Lords, among the most recent developments is an agreement only in principle, though it is not yet confirmed, of the Soviet acceptance of United States monitors. But the Russians apparently are prepared to accept non-official American scientists to start stations in the Soviet Union but are not prepared to talk to the United States Government scientists about verification. The Soviet proposal suggests that non-official US scientists should be admitted to the Soviet Union. The Americans are prepared to agree that Soviet Government scientists should be admitted to the United States. Clearly this is a difference of view, but we hope that there might be a resolution of it.

Business
2.56 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Davidson will, with the leave of the House, repeat a Statement that is to be made in another place on restriction on the movement of sheep.
It may be for the convenience of the House if I announce that the Committee stage of the Wages Bill will be adjourned at approximately 7.30 p.m. for approximately one hour and that during this adjourn-ment three Representation of the People Regulations and the Committee stage of the Consumer Safety (Amendment) Bill will be taken.

Bournemouth-Swanage Motor Road and Ferry Bill [H.L.]
Read a third time, and passed, and sent to the Commons.
Plymouth City Council Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Private Bill Procedure
The Lord President of the Council (Viscount Whitelaw)The Lord President of the Council (Viscount Whitelaw) rose to move, That this House do concur in the resolution communicated by the Commons in their Message of Wednesday last.
The noble Viscount said: My Lords, in moving this Motion standing in my name on the Order Paper I should briefly explain its purpose. The House of Commons agreed last week that it would be desirable to appoint a Joint Committee of both Houses to consider the whole question of Private Bill procedure and in particular whether there were any ways in which certain matters now requiring the promotion of a Private Bill—for example, those concerned with the construction of works—might be dealt with other than by private legislation. Concern has been expressed recently, particularly in the House of Commons, but also in your Lordships' House, about certain aspects of what I will broadly call private legislation procedure. These arose, for example, in the Joint Committee considering the question of the Okehampton bypass and in the Joint Committee considering the Edinburgh western relief road.
It is now some 30 years since Private Bill procedure was last considered, and the noble Lord the Chairman of Committees, following discussion with the Chairman of Ways and Means, agrees that it would now be appropriate for both Houses to set up a Joint Committee to examine these issues and to consider whether any changes might be made. I hope therefore that your Lordships will agree to this Motion, which will lead to the formation of a Joint Committee. In due course the Committee of Selection will be asked to choose those Peers who will be appointed to the

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committee and who will face what I know will be a formidable inquiry. My Lords, I beg to move.
Moved, That this House do concur in the resolution communicated by the Commons in their Message of Wednesday last—(Viscount Whitelaw.)
On Question, Motion agreed to, and it was ordered that a Message be sent to the Commons to acquaint them therewith.

Gas Bill
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the amendments for the Report stage be marshalled and considered in the following order—

Clause 1,

Schedule 1,

Clause 2,

Schedule 2,

Clauses 3 to 9,

Schedules 3 and 4,

Clauses 10 to 15,

Schedule 5,

Clauses 16 to 60,

Schedule 6,

Clauses 61 to 67,

Schedules 7 to 9,

Clause 68.—(Lord Belstead.)

On Question, Motion agreed to.

Safety at Sea Bill
Read a third time.
The Earl of Lauderdale: My Lords, I beg to move that this Bill do now pass. Before we leave this matter, it would be churlish not to congratulate the promoter of this Bill in another place, the Member for Banff and Buchan, Mr. Albert McQuarrie, for his ingenuity and resourcefulness in bringing it forward. His was the first work in drafting; he pursued it through, and one would hope that such a useful Bill, which after all carries the mantle, as he himself does, of the noble Lord, Lord Boothby, will be remembered as the McQuarrie Bill. I beg to move.
Moved, That the Bill do now pass—(The Earl of Lauderdale.)
On Question, Bill passed.

Health Service Joint Consultative Committees (Access to Information) Bill
Read a third time and passed.
Children and Young Persons (Amendment) Bill
Report received.

Wages Bill
3.2 p.m.
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Trefgarne.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES (Lord Aberdare) in the Chair.]
Clause 1 [General restrictions on deductions made, or payments received, by employers]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 1:
Page 1, line 9, at end insert ("is reasonable in amount having regard to all the circumstances of the case and").
The noble Lord said: Amendment No. 1. in my name and those of my noble friends, comes to a central issue in a Bill which will take away a protection for a very large number of working people. With the leave of the Committee, I shall move this amendment and speak also to Amendment No. 56. It is my understanding that the noble Lord, Lord Rochester, will speak to his Amendment No. 2, in the course of the same debate.
This central issue is that just 90 years ago the Truck Act 1896 protected most deductions from wages on broadly a two-pronged basis. First, no deduction could be made unless there were a clear contractual base for it in a written contract or a notice in writing at the workplace. Secondly, the 1896 Act required that the deductions from wages should be fair and reasonable. Of course, it is true that those provisions applied only to manual workers and it has long been a non-controversial point of policy in many quarters that the division between manual and non-manual workers should cause this aspect of the law to be changed; although, as we shall see, the Government set up in this Bill a new dichotomy between two different types of worker.
The question is how to amend the law. Should it be amended to apply to all workers no protection or a protection based only on a contract of employment; or should it retain the second element which has been there—and indeed has been there as a crime— since 1896: that it is wrong and illegal to deduct unfair and unreasonable amounts from the wages of a worker? When the noble Lord the Secretary of State spoke to the House on Second Reading on 6th June he gave this explanation of this part of the Bill at col. 1205 of Hansard. He said:
"The Truck Acts also include statutory controls on deductions from wages. The Government have decided to bring those up to date. That is necessary for several reasons. The controls are uncertain in their effect; they apply only to manual workers and, in part, to shop assistants; they establish criminal offences to deal with what are essentially contractual disputes between workers and employers; and they are designed to deal with problems that existed in 1896 not 1986.".
We agree that the manual worker division should be revised; we can see the case is there to treat the matter in the civil law as against criminal offences, although it depends upon how you do it. We dispute that there has been great uncertainty in this part of the law. No evidence has ever been brought forward to suggest it. We certainly dispute the suggestion that the problem, is for 1896 not 1986. All the evidence is the other way. The Secretary of State appeared not to know that there is a mass of evidence that deductions from workers' wages play a major and an increasing part in the lives especially of the low paid, the ill-organised, the isolated and the weak groups of workers in our society.
Employers in many areas—certainly not in all but in many areas such as garages—have extended these deduction practices beyond anything that could remotely be called reasonable. The evidence of the Citizens' Advice Bureaux in regard to that Government's consultative document gave many examples. The Government, I am sure, would not write off the evidence from such a responsible body. They told them about long-distance lorry drivers who had large deductions made from the month's wages for expenses without reasons being explained. The other cases included a young man of 17, a forecourt attendant, on duty when a group of children stole sweets from the shop. He could not leave the shop unattended as that risked even worse fault on his part. That whole loss was deducted from his wages, leaving him £5 living expenses for the week.
The trade union movement knows of these practices. The Union of Shop, Distributive and Allied Workers has spoken of employers increasingly introducing the power to deduct for shortages into the contracts of workers if it cannot be resisted. The idea that this is a problem for 1896 and not 1986 is defeated even by the law reports. In the case of Sealand Petroleum Company and Barratt, in this year's All England Reports, in the second volume, at page 360, noble Lords will find that an 18 year-old lad was taken on after an afternoon's trial at a self-service petrol station, with a statement in writing which said that he was to be liable for any loss of cash, stock or other equipment as a result of his breach of contract or other duty or any negligence; and that that amount could go immediately from his pay. That was interpreted as meaning, for example, that if he did not take the vehicle number of any customer who did not pay for the petrol at the self-service station, that amount would be deducted.
This came to the court under the 1896 Act. He had to look after the shop and the self-service station and he had to look after the car-wash bay, which was difficult to see from where he primarily worked. The Divisional Court of the Queen's Bench Division had no doubt whatever that this could not be supported under the 1896 Act. Mr. Justice Nolan said that the,
"contract afforded no adequate means by which the respondent could check or supervise the calculations of deficiencies for which he was to be held responsible".
He could not get near the till when it was checked.
"Thus his prospects of being able to mount a successful challenge… by complaint would be negligible."
He was not trained.
"He was, it must be remembered, 18 at the time… and was taken on after only one afternoon's trial."
The judge concludes that this contract,
"gave a wholly arbitrary power to the employer within the limits of the total loss ascertained by the employer as to the amount of the fine."
Lord Justice Watkins said that it,
"contains a very one-sided obligation. It is an obligation on the employee to accept the consequences of whatever it is the employer determines shall be the effect of his finding a deficiency in the takings at the end of a working day".
As I say, the evidence is there that this is very common in garages. It is quite common in other parts of retail employment, but it is also increasingly found in employment which is not retail and not in garages, although the worst practices appear to be in many garage chains. The essence of the problem is that these deductions fall hardest on employees who are the most vulnerable. They are the least unionised and the least protected in any other way. As the citizens' advice bureaux evidence put it,
"You find workers who will take almost any terms in the labour market of today."
Having got a weak labour market, as we like to call it in rather abstract terms—a market in which workers like these are open to exploitation—how should we amend the law? Should it be by making sure that every deduction is provided for in the contract? Yes, but it has to be said and it has to be understood that in regard to the worker in a labour market in the kind of situation Anthony Barratt was in on that garage forecourt, consent by contract is to a large extent a fiction. Consent by contract is in fact submission in order to get a job at all.
The Truck Act of 1896 was based upon debates, including debates in your Lordships' House, almost 90 years ago which were about precisely this problem although no doubt the social context was different. I do not know whether the problem was more or less widespread: perhaps it was more. But it was not about the issue that we are debating today; namely, whether to take away (as this Bill would) the protection of reasonableness as a residual way of stopping these arbitrary practices. The debate was whether or not deductions from wages should be prohibited altogether or whether there should be a limit assessed by the standards of reasonableness. So the whole axis of the debate today is one step backwards on the Bill which is before us and which this amendment would only bring back to the debate of 1896 and go for the same solution. That solution has not proved wholly unsuccessful. It has not been wholly successful, partly because, founding itself on a criminal basis, it was necessary to have a wages inspectorate which enforced it beyond the resources which the wages inspectorate has usually had, especially during the past few years.
But the idea that there should be at least these two parts of possible protection for workers of this kind seems to us the most elementary protection for which one can ask. Nor is it true that our law of contract does not know of this concept. Indeed, not only in the Unfair Contract Terms Act of 1977 but in many other statutes—and in particular in the Act of 1977—the idea that certain contractual terms should not be permitted to operate according to their tenor on the face of the contract but should be moderated by the

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court by some concept of what is reasonable is now established part, certainly of consumer transactions and of many other areas of the law contract.
What we are asking for in this amendment is that workpeople in this position should not be made responsible for possible losses from thefts by customers or thefts by other employees; or as a result of defects in stock control mechanisms which we shall come to later today; or by failure to train workers like Anthony Barratt (who had only an afternoon's training) or certainly by failure of management supervision. No doubt there are failures all round them; but there are these deductions of amounts for which they are not, in anyone's moral perspective, themselves responsible, other than on the paper which they have had to take to get the job.
The matter goes further because some of the practices are really scandalous. There are garage chains—and Heron Garages appears to be one—which set a ratio of oil sales to petrol sales on past experience, and if the petrol sales then come to so much on a check they assume that the oil sales should have come to the same ratio; and if there is some discrepancy to the disadvantage of the attendant, they deduct amounts from wages on that basis. That will be in the contract or the document of at least most of those workers.
However, is it right that there should be nothing else in the law to protect them in that situation? We say that for the employee and indeed the manager—because this matter can go to the managers of such retail outlets—there should be some protection. This is for all workers in respect of the amount that can be taken from the wage upon which not merely the worker but the family at home depend. The family expects a weekly wage; and if the worker is responsible for some specific misconduct, that is another matter. But the broad test should surely be what we have had for 90 years: that the family expectation of the wage should be limited by what is in the contract and by what is reasonable. Take away the second protection, leaving various avenues of exploitation for those who wish to exploit—the bad employers who may well be in the minority but who exist in terms of the practices going on now—and the workers are at a double disadvantage. They are the most vulnerable and the weakest. That is what this Bill would do.
It is our great hope that the Government will at least say they will think again about putting into this Bill a protection and not mark themselves as a government in favour of unreasonable deductions. This amendment asks only for that which is reasonable, and I beg to move.
Lord Rochester: It may be for the convenience of the Committee if I speak now, with leave, to Amendments Nos. 2, 13, 70 and 112.
Lord Campbell of Alloway: Would the noble Lord forgive my interrupting him? I am very grateful to him. There is an objection because they are totally disparate considerations that arise under this Amendment No. 1 and on Amendments Nos. 2, 13 and 70. It would import, with the greatest respect to the noble Lord, an intolerable degree of confusion if he were to try to deal with two wholly separate and
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distinct concepts at one and the same time. If the Committee is with me on this, I would respectfully suggest that we deal with the amendment of the noble Lord, Lord Wedderburn, and then in due course deal with the other set of amendments.
Noble Lords: Hear, hear!
Lord Rochester: I am in the hands of the Committee. I had understood that there was a measure of agreement that this was the procedure which should take place. Perhaps the noble Lord, Lord Trefgarne, would help us on behalf of the Government.
Lord Trefgarne: I hope my noble friend will feel able to agree that we should proceed in the way proposed by the noble Lord, Lord Rochester. As my noble friend will appreciate, considerable discussions go on through the usual channels as to how we should handle these matters; and if they fall apart as soon as we get to the Floor of the Chamber very often we find ourselves considerably detained. So I hope my noble friend, at least on this occasion, will feel able to agree that we should discuss the amendment of the noble Lord, Lord Rochester, with the one proposed by the noble Lord, Lord Wedderburn.
Lord Campbell of Alloway: I am obliged to my noble friend the Minister. Quite clearly, the usual channels have messed this one up, but if they have done it, they have done it and we had better get on with it.
Lord McCarthy: I think it was our intention that, although the noble Lord, Lord Rochester, could speak to both amendments, there would be a separate vote on our amendment. We intend to press our amendment to a separate vote. Therefore, if the noble Lord were in a position in which he wanted to support one rather than the other, he would in the end be able to do so.
Lord Rochester: It was worked out and that is why I said at the outset that it was my intention to speak to these amendments, rather than at this stage to move any. Like the amendment which has just been moved by the noble Lord, Lord Wedderburn, the amendments to which I referred—perhaps for the convenience of the Committee I should just repeat that they are Nos. 2, 13, 70 and 112—are aimed at ensuring that deductions from wages are reasonable, but they set about the task in a way different from that proposed by the noble Lord, Lord Wedderburn.
At the Second Reading of the Bill I expressed the view that there was a strong case for a code of practice to be drawn up by the Advisory, Conciliation and Arbitration Service after consultation with other interested parties to facilitate the implementation of Part I of the Bill. In response the noble Lord, Lord Trefgarne, assured me that guidance material would be produced before Part I commenced and added that ACAS was also aware of the suggestion that it should produce advice on aspects of the Bill.
Since then I have come to feel that the area which could most usefully be covered by such a code is that

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of deductions from wages, particularly in relation to the form which the relevant term in the contract of employment should take. Indeed, it was a discussion in another place of the need to build on good practice in this matter which led the Under-Secretary of State to say, first, that he should perhaps be responsible for recommending that ACAS should produce guidance on it and then, more specifically, that it would be a good idea if ACAS was to propose a draft form of contract.
Between them, the amendments to which I am now speaking seek to take the matter a little further, first, by providing in Amendment No. 2 that deductions from wages should accord with a code of practice; secondly, by requiring the Secretary of State—that is, under Amendment No. 13—to issue such a code prior to the date on which Part I of the Bill comes into force; and, thirdly, by stipulating in the new schedule referred to in Amendment No. 70 that the objective of the code should be to ensure that deductions from wages are fair and reasonable. The terms of the proposed code of practice are set out in the schedule and they follow closely Section 3 of the Employment Act 1980, except that in this case the issuing of the code by the Secretary of State would be mandatory rather than, as in 1980, permissive.
Initially, as under the 1980 Act, the Minister would have to consult ACAS, publish a draft code, consider representations made to him about the draft, and have the draft approved by both Houses of Parliament. Once it was introduced, failure to observe the code would not render an offender liable to proceedings, but in any proceedings before a court or industrial tribunal the provisions of the code would be admissible in evidence and could be taken into account in determining any relevant question. Amendment No. 112 is consequential in simply enabling the process of introducing the code to begin at the time the Bill is passed, rather than waiting until the rest of Part I of the Bill comes into force.
If I may turn to the amendment which has been moved by the noble Lord, Lord Wedderburn, it follows from what I have so far said that I am in sympathy with its objective. As he said, the Bill as it stands does not even uphold the existing statutory safeguards, particularly those which were a feature of the Truck Act provisions of 1896. In general, the contract of employment should, in my view, be regarded as inviolate—that is, as between the employer and the employee—but the principle that deductions from wages should continue to be reasonable in amount seems to me to be of such basic importance that it should be treated as an exception to the general rule. My only doubt is whether a requirement that the deduction should be,
"reasonable in amount having regard to all the circumstances of the case",
to quote the terms of the amendment just moved by the noble Lord, Lord Wedderburn, would of itself prove effective.
In two recent well publicised cases concerning petrol station attendants—the noble Lord referred to one of them—the courts have done their best to interpret the law as it now stands, but in doing so they seem only to have succeeded in adding to current doubts about its
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application. It appears questionable, therefore, to me whether the insertion in this subsection of a test very similar to the one now in operation would serve its intended purpose.
The aim of my amendment is to see that it has a better chance of doing so by providing additionally for a code of practice containing practical guidance on this subject. In my view this would both diminish present uncertainties and produce a welcome measure of consensus in what would otherwise remain a contentious area. Indeed, I have enough faith in ACAS to feel that if the task of drawing up such a code were entrusted to it, the outcome would prove generally acceptable. I hope, therefore, that the Committee will support the introduction of a code of practice of the kind proposed in this amendment to facilitate implementation of this part of the Bill. I shall not move this amendment, but will leave the matter there for the time being.
3.30 p.m.
Lord Campbell of Alloway: May I first speak to Amendment No. 1 and then, with the Committee's leave, to Amendments Nos. 2, 13, 70 and 112. I speak in opposition to both amendments in the names of the noble Lord, Lord McCarthy, and the noble Lord, Lord Rochester. On Amendment No. 1, I have listened with that degree of attentive awe which any practitioner owes to a law don, but I fear that I am unable to follow the logic of the argument of the noble Lord, Lord Wedderburn, other than on the basis that, as he said, consent by contract has become a fiction—a proposition with which I hope your Lordships' Committee will not agree.
Amendment No. 1 is open to serious objection because it has to be seen in context with Amendment No. 4, which seeks to excise paragraph (b) of Clause 1(1) from the Bill, and unlike the amendments in the name of the noble Lord, Lord Rochester (Amendments Nos. 2, 13, 70 and 112), it does not impose an unacceptable qualification on Clause 1(1) (b); it simply seeks to excise it.
There are three grounds of objection to Amendment No. 1 moved by the noble Lord. First, there is the imposition of a wholly unacceptable qualification on subsection (1) (a).
Lord Wedderburn of Charlton: When we come to the amendment concerning Clause 1(1)(b) I shall be happy to explain to the Committee and to the noble Lord its purport, but at the moment he should not assume that its relationship is either alternative or otherwise to the amendment we are discussing.
Lord Campbell of Alloway: I am assuming that it is both, because it is either one or the other. If noble Lords will be good enough to look at Amendment No. 4 they will see that it excises Clause 1(1) (b). If it excises Clause 1(1) (b), in those circumstances the objection is to excision, because who better than the worker to judge in this day and age whether he should signify his consent? Therefore it is objectionable on that ground. If it does not excise Clause 1(1) (b) it is objectionable because if Clause 1(1) (b) is left in it imports a wholly impracticable qualification affecting the operation of

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Clause 1(1)(b). I know the noble Lord intervened to assist, but, with respect to him, I had worked this one out, and whichever way you put it there is a problem. I am seeking, not unkindly I hope, to expose the problems that lie within the proposed amendments. That is the first objection.
The second objection as I see it is the one to which I have referred—the excision of subsection (l)(b), taking the point that it is an alternative objection. The third is that Amendment No. 1 read in context with all the amendments to Part I of the Bill in the name of the noble Lord—
Lord Mishcon: I wonder whether the noble Lord with his usual courtesy will allow an intervention, because this is upsetting the whole rules that govern us in discussion at Committee stage. We are either discussing amendments that have been moved or by arrangement are to be spoken to or we really find ourselves in complete disarray. Amendment No. 4 has in no way been moved. My noble friend may decide when he comes to Amendment No. 4 either to move it or not to move it, but if we start discussing amendments which by arrangement are not to be discussed and assume that they are going to be moved, we really end up in chaos. Since the noble Lord was anxious to avoid chaos before, in his submission to the Committee, I am sure that he will now wish to avoid it in his own case.
Lord Campbell of Alloway: The noble Lord, Lord Mishcon, for once and wholly exceptionally fails to do me justice. The whole problem arises because one has to look at Amendment No. 1 objectively. If you look at it without Amendment No. 4 it raises the objection which I have made. If you look at it—and I take only a moment to say it—with Amendment No. 4 it raises the objection to which I have also spoken. I am not speaking to Amendment No. 4. This is one of the reasons I was hoping that these two sets might be dealt with separately. I hope that I have satisfied the noble Lord on that.
I come to the third and last objection to Amendment No. 1. If you look at Part I of the Bill as the Government propose it should be—there are no government amendments to Part I—and if you look at Part I of the Bill wth Amendment No. 1 and the set—I say no more than that—of Opposition amendments in the name of the noble Lord, the whole structure of Part I which is broadly intelligible and satisfactory is drastically altered. The hope must be that my noble friend the Minister will not accept Amendment No. 1 for the reasons that have been given, because any qualification by this Bill which qualifies as distinct from repealing or amending (and one goes to Clause 1(l)(a)) what,
"is required or authorised"
by statute or alters what has been agreed under a contract of employment makes a vast general superimposition on existing statute law which is wholly unacceptable and also indeed on the freedom of contract.
Those are the basic objections to the first amendment. The set of amendments moved by the noble Lord, Lord Rochester, raises quite different objections. I have listened with due deference to the
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noble Lord, who speaks with authority on all matters relating to good working relations between management and staff, but the objections to this set of amendments go not only to form but to substance. First, the provisions of Part I of the Bill operate to ensure that the deduction should be fair and reasonable in all the circumstances, broadly; secondly, the proposed injection by paragraph 1 of the Schedule—and the Committee will find that in Amendment No. 70—of standards of what is fair and reasonable could operate to qualify retrospectively existing statute law or obligations under the employment contract under Clause l(l)(a); or to negative matters of consent in writing, no doubt given on the basis of independent advice under Clause 1(1)(b).
The third objection is that because the obligation is upon the Secretary of State to issue a code of practice under paragraph 1 of the Schedule—that is in Amendment No. 70—and is upon Parliament under paragraph 4 to approve the code, and upon courts, tribunals and the Central Arbitration Committee to take the code into account under paragraph 7, that is neither appropriate nor requisite; nor indeed is it acceptable. There is an internal conflict in the proposals of the noble Lord, Lord Rochester, which, with respect to him, makes no sense because in (2A) in Amendment No. 13 you have the type of code that has no legal effect at all. It is a mere practical code of guidance that is not taken into account. If you look at paragraph 7 of Amendment No. 70 you see the type of putative effect of the code. The two lie in irreconcilable conflict and the source of confusion is all but unimaginable.
The set of triple amendments is objectionable on that ground. The further objection is basic. What the noble Lord, Lord Rochester, has done is to make a fundamental departure from settled practice under which the trigger clause which introduces the code, and which determines the legal efficacy, is found in the body of the Bill and not, as he has put it, in the schedule. Paragraph 1 of the schedule, which mistakenly he has put in the schedule instead of in the body of the Bill (hence the conflict) is borrowed from Section 3 of the Employment Act 1980. A similar section is found in Section 6 of the Employment Act 1976.
I shall not detain the Committee but there is, in any event a very serious objection, recorded in the debate on 15th January in which the noble Lord was good enough to take part, as to resort to this type of code—and it is all on record in Hansard. It has given rise to concern. It is the type proposed in paragraph 7 of Amendment No. 70. To borrow a phrase in another context from Churchill, it is neither one thing nor the other. Although it is admissible under paragraph 7(a) in Amendment No. 70, there is no sanction whatever if it is not taken into account under paragraph 7(b). There is no appeal and there is no judicial review. It is mere putative efficacy dressed up as a sort of legal doll. If a code is needed—which is much to be questioned because ACAS has certain responsibilities which it could discharge—then either it should be the code of practical guidance which is the very type proposed in subsection (2 A) of Amendment No. 13, or it should be a code having full legal effect such as is taken into

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account at first instance and then can be taken into account on appeal or judicial review; analogous, as the Committee will remember, to the Commons amendment to the Animals (Scientific Procedures) Act 1986. There is another example which will be moved on Report in respect of the Bills dealing with the disabled and gas next week.
Therefore, this set of amendments of the noble Lord, Lord Rochester, proposes a type of code which follows an evil precedent. The form of the set of amendments is open to objection on the ground of irreconcilable conflict. It departs from settled practice and it imports wholly unacceptable qualifications into Clause 1 of the Bill. For those reasons, which are quite distinct from the reasons on Amendment No. 1,I hope that my noble friend the Minister will not accept that set of amendments.
3.45 p.m.
Lord Denning: As between these two amendments, I should like one or other of them to be accepted, but of the two I prefer that proposed by the noble Lord, Lord Rochester. Let us think for a moment of the problem under the 1896 Act. That applied only to manual workers. It did not apply to people working in shops, and the like. Under that Act it was permissible for an employer to make deductions from his men's wages so long as he put up a proper notice warning them about it. In addition, he could deduct from their wages subject to this: the men had only one form of complaint—they could not go to the civil courts or to a tribunal but had to prosecute the employer before the petty sessions magistrate and had to prove that the deduction was not fair or reasonable.
No wonder that in those days nobody went through that archaic procedure. No man did. I remember no case brought before my court under those Acts in all the years I sat. In the last year or two some petrol garage people have become alive to the situation and as the noble Lord, Lord Wedderburn, said, some petrol attendants, and so on, have been faced with contracts or notices enabling the employer to deduct everything—all the deductions and so on—from the workers' wages. That was taken before the magistrates and then before the Divisional Court and it was held to be not fair or reasonable. It was a very proper decision, if I may say so, but it is time that we had another attempt to put the law on this matter on a proper footing.
As I read this Bill and these clauses they go a long way towards putting everything in proper order. There has to be a proper contract for the employee. He must have signified his agreement to it in writing. The employer must then deduct in accordance with that contract and there is provision that he cannot deduct more than 10 per cent. That is a very good way of dealing with the matter. Moreover, if the man is dissatisfied and states that it is not good enough, he can go before the tribunal. That is all right and proper.
However, there is one omission from this Bill which was in the 1896 Act—it must be fair and reasonable. That is why I suggest—and the noble Lord, Lord Wedderburn, was quite right—that many of these so-called contracts are a pro forma. A form is set before
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the man and he signs it without reading it. Members of the Committee will have done that dozens of times in contracts that they have signed. These printed forms are hopeless and time after time I have said in the Court of Appeal that they ought to be fair and reasonable. Under the Unfair Contract Terms Act 1977 the legislature has said that many commercial contracts, with all these exemption conditions, are enforceable only if they are fair and reasonable.
Therefore, we should have in this Bill a provision to ensure that deductions can be made only in accordance with a contract that is fair and reasonable. In the circumstances of the case, whatever the man has done, the deductions must be fair and reasonable. That is the way in which I hope the Bill will be amended in due course.
What is to be the form of the amendment? With respect to the noble Lord, Lord Wedderburn, the first amendment goes only a little way. It says nothing about fair and reasonable. It only has to be,
"reasonable in amount having regard to all the circumstances of the case".
That is only looking at the amount—whether £10 or £5 should be deducted. That is not looking at the terms of the contract, or the arrangements, and what has happened to the man—whether or not he has been careless. There is nothing in that amendment as to whether it is fair or reasonable. But the condition of fair and reasonable comes into the proposals of the noble Lord, Lord Rochester. The first paragraph of Amendment No. 70 states:
"The Code of Practice issued by the Secretary of State … shall have as its objective to ensure that any deductions from wages is fair and reasonable having regard to all the circumstances of the case".
That is just to my liking. As my noble friend Lord Rochester has said, there is an advantage with a code of practice that all these matters are not necessarily allowed to be dragged up in the courts. They may be small matters, so let them go if your please. They should not come under the strict and rigid rules of law. These matters should go before a tribunal which will consider the terms of the contract and whether they are fair and reasonable. It is for this reason that I favour a code of practice. Codes of practice are now widely recognised in law. They are very useful in dealing with cases where there is a mass of detail to be considered which, if I may say so, it would be quite inappropriate to consider in your Lordships' House. Let us consider the Highway Code. A person in charge of a vehicle has to exercise due care and attention but details such as when he is to keep to the right side of the road and when it is considered safe to overtake, and so on, are left to the code of practice. These matters should be dealt with by a tribunal and the code should be there for guidance. We have an industrial relations code which is concerned with whether a person has been properly or reasonably dismissed. It is recognised that decisions of this kind depend very much on the individual situation.
We should not put such details in a statute but in a code of practice. For example, in the Police and Criminal Evidence Act which was passed a year or so ago, the words of the statute are very difficult for people to understand. Even I fail to understand a lot of the statutes that we have now. The value of a code of practice is that it puts everything into simple words, so

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that the people who have to act according to the code of practice can read and understand it. At the moment I am afraid that in Clause 1 of the Bill as it now stands there is a great deal of detail. For example, subsection (5):
"Nothing in this section applies—

(a) to any deduction from a worker's wages made by his employer …

(b) to any deduction … or any payment received from a worker by his employer".

There is a great deal of detail already in the Bill.
When we come to the amendments of the noble Lords, Lord Wedderburn and Lord McCarthy, there are all sorts of other details, such as the proposal that a copy of the provisions should be presented by the employer when he makes any deduction, and so on. Many of these matters are very appropriate for a code of practice, but are much too detailed for your Lordships to have to consider time after time in Parliament.
On the whole, if there has to be a choice between Amendment No. 1 and Amendment No. 2., I should be against Amendment No. 1 and in favour of Amendment No. 2. However, if I may say so I am not sure but that the better course is for the Minister to take this point away and for him to bring back something which will give effect to the underlying principle, which is that in all the circumstances, whether under the contract or not, the deductions should be fair and reasonable—just as was provided for in the 1896 Act. I am against Amendment No. 1 and in favour of Amendment No. 2 on the whole.
Lord Murray of Epping Forest: We should perhaps remind ourselves that a major aim, perhaps even the main purpose, of this part of the Bill is to extend cashless pay. This was the basis of discussions between the TUC and a former Secretary of State for Employment. It is a purpose that I think should commend itself to the Committee and indeed to most people. It is right and proper to the extent that the Truck Acts are an impediment—and various inquiries have shown that they are only a minor impediment—to the extension of cashless pay in an orderly way.
This particular provision smuggles in behind or underneath the purpose of extending cashless pay a serious and indeed improper weakening of what was the original, definitive purpose of the Truck Acts, which was, in short, to stop unscrupulous employers from cheating their employees. It would indeed be a happy state of affairs had unscrupulous employers disappeared from the face of the earth, but I fear that it is not so. No doubt they are only a minority of employers but evidence has been put before Parliament that they are most certainly there. It would also be a happy state of affairs if alternatively the workpeople concerned had had the prescience, foresight and ability to organise themselves collectively in order to resist victimisation, oppression or cheating. But, as has already been said, the extent of trade union organisation, partly because of the nature of the trades and occupations, is very limited indeed.
It is therefore still incumbent upon this Committee to ensure that the conditions of working people are not made worse by their inability to resist an impost by
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their employer by incorporating within the legislation the degree of protection that is suggested in the amendment that is now before us. I find it odd that employers have a unilateral right in any event to impose fines upon their employees. If the employee is guilty of dishonesty, let him be sacked or prosecuted; if the employee is cheated by a third party—such as a motorist who drives away with a full tank of petrol—let the employer look to his management systems and supervision and not impose a penalty upon the employee, who may not have caused the original distress or damage.
Be that as it may, this Bill gives employers a great power which they can exercise against individuals who are weak, who are anxious for a job and who. as the noble and learned Lord, Lord Denning, has said, will sign almost anything in order to get work.
It is right that the tribunal, if it is to be a tribunal, should have at its disposal not only the powers that are expressed in the Bill but also the further power to ask whether what the employer has done is fair and reasonable. It should have the further power to search behind the narrow words—words of which perhaps the employee has repented, regretting that he had not had sufficient foresight—and to ask that question. The Government themselves have acknowledged the need for common sense to be operative in this context in that they have suggested that a figure of 10 per cent. should be applied in certain circumstances. We are not arguing about the level of the figure. The idea of the figure indicates that there must be some common sense and some application of shrewdness of judgment, in order to prevent the worst excesses. That is why I think we should incorporate some further protection within the legislation or, perhaps I should say more accurately, why we should preserve a protection which has historically been found to be necessary and for which, regrettably, time has not removed the need.
Lord Milverton: I am quite prepared to accept either the amendment of the noble Lord, Lord McCarthy, or the amendment of the noble Lord, Lord Rochester. I have listened to the different arguments and 1 am prepared to support either of the amendments, because I think it is thoroughly disgraceful that, as has been suggested, young people who do not have the means, the power or the strength to insist on fair play, can be taken advantage of. That is why I am prepared to support either of the amendments. I do not think it can be too strongly emphasised how thoroughly disgraceful it is if young people are being taken advantage of and how essential it is that it should be stopped.
4 p.m.
Lord Coleraine: I shall speak only to Amendment No. 1 which was moved by the noble Lord, Lord Wedderburn. Because I find myself basically in sympathy with it, I should like to say in answer to what I think was the only point of substance made in relation to the amendment by my noble friend Lord Campbell of Alloway that I cannot for a moment agree that consent by contract is a fiction in these filling-station cases. The amendment is designed to underpin the protection offered by the Bill to low-paid

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workers in what are in times of high unemployment very vulnerable jobs indeed. Whether the amendment goes far enough is one question, and I am mainly going to direct what I have to say to the question of whether there is a need here which the Bill does not rectify.
This is not a party political question. The Truck Act 1896 was introduced under a Conservative Administration, with general support, to meet the needs of its time. Now it limps. It is interesting to note that about a third of this Bill, and almost all of Part I of it, is devoted to re-legislating the 1896 Act in respect of deductions from wages. I see that as a clear indication that the problem of deductions, though it may have a different shape now, is just as much with us as it was at the turn of the century.
There is in my view a relatively widespread problem which this Bill does not tackle adequately. Once a provision allowing deductions from wages is in a contract of employment, no matter how unreasonable it may be, provided that the employer is alert to see that the modest requirements of the Bill have been complied with, there will be nothing that the county court, the magistrates' court or the industrial tribunal can do to protect the employee. There will be just the same abuses as were seen in 1896.
I should like to draw briefly on two examples of what actually happens, each taken from a recent decision of the Divisional Court. The judgment in the first—and that is the case of Mr. Barratt, to which the noble Lord, Lord Wedderburn, referred—was only four months ago. Perhaps I may mention that Mr. Barratt went to the stipendary magistrate and complained that his employers had unlawfully fined him. The stipendary found the case proved, fined the employers £250 and ordered them to pay costs and to repay to Mr. Barratt the deduction which had been made, amounting to £75.90.
Under the Bill the making of wrongful deductions is to be decriminalised. It is only necessary to pause to consider for a moment the size of the fine in this case compared with the amount of the deductions to see that one strong deterrent to the making of wrongful deductions is to go with the repeal of the 1896 Act.
I would also point out to the Committee that on the facts of the case Mr. Barratt worked for only three weeks at the filling station. His net wages were to have been £55·90 a week. In one week he lost £20; in another he lost the lot. Mr. Barratt was lucky. What the court found in his case was that his employers had wrongly imposed a fine on him and so they put themselves outside the Act. They had not taken his money by way of compensation for their loss, which might have been legitimate as between an employer and an arguably negligent employee. The Divisional Court decided that as a fine it was not a fair and reasonable one.
The second case, also a filling-station case in the Divisional Court, was decided a year ago. A Mr. Bristow was a cashier. He, like Mr. Barratt, was 18 years old. In what seems to have been a written contract of employment there was this provision:
"Every site employee, together with other site staff working with him, if any, is responsible for all cash shortages that may occur in the cash till that he is using. He will, therefore, undertake to make good
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to the company either all or his share of the total shortages on every shift that he works, either immediately or by deduction from any wages outstanding".
That made the employee liable for cash deficiencies, and he signed a separate acceptance of responsibility in respect of stock deficiencies.
In that case the intention of the employers was that Mr. Bristow should be legally liable, irrespective of whether he or indeed any other employee was culpable, for a share of all loss of cash and stock. In the five weeks of his employment in 1983 there was deducted from his pay packet an average of 17 per cent. of what should have been his weekly net wage.
Mr. Bristow failed both before the magistrates at Brentford and in the Divisional Court because he could not show in his case that the deductions were fines and so covered by the Act. He could only proceed under Section 1 of the Truck Act 1896, which deals with fines, because he was not under that Act a workman; he was a shop assistant and shop assistants are protected only by Section 1 of the Act. That is one of the fine but outdated distinctions in the Act which are to be eliminated with this Bill's passage into law.
What seems to me to be common to both cases is that the deductions were unreasonable, but if the Bill is passed unamended it would be possible for unscrupulous employers to continue to make those unreasonable deductions. Both Barratt and Bristow were 18 years old. What sort of introduction to employment was that, and what sort of first-job experience was it?
The amendment proposed by the noble Lord is a modest one. I wonder whether it could not be widened to provide, in effect, that all contractual provisions for deductions must be fair and reasonable and not just that the deductions made under the provisions must be fair and reasonable. Might it not be better to influence employers to write fair contracts in the first instance, rather than to leave it to employees to find out that unfair contracts are unenforceable?
I hope that my noble friend will think again about this clause in the Bill and perhaps come back at a later stage with something to meet what seem to be the general feelings of the Committee today.
Lord Trefgarne: It may help if I briefly explain the philosophy of the controls on deductions from wages in Part I of the Bill. The Government conducted a consultation exercise in 1984 on controls on deductions from wages that should be established if the Truck Acts were to be repealed. The results suggested that there is no major problem that workers are currently experiencing in the field of deductions from wages other than in the limited area of deductions concerning cash shortages and stock deficiencies. The Bill provides for general controls on deductions from wages that, broadly, allow the parties to agree their own terms, but then ensures the employer sticks to the terms. It provides for special controls in Clauses 2 and 3 on deductions to cover shortages.
It is quite reasonable that employers will make in some circumstances disciplinary deductions from wages as a sanction for breaches of discipline that do not merit dismissal. If such deductions were entirely

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prohibited employers might more readily resort to dismissal. The philosophy of the Bill is to let employers and workers sort out rules governing such deductions in the contract. But Clause 1(3) ensures that the worker knows what the rules are; Clause 1(4) ensures that the rules cannot be changed retrospectively by the employer to allow a deduction in respect of events that are past; and Clause 5 ensures that the workers can enforce the rules before an industrial tribunal. I believe that these are fair and reasonable provisions.
I recognise that the amendments moved by the noble Lord, Lord McCarthy, and his noble friend are inspired by a desire to reinstate certain words in the Truck Act 1896 concerning reasonableness. It is proposed that deductions from wages or payments by workers to employers should be reasonable in amount, having regard to all the circumstances of the case. But the fundamental difficulty with a requirement that deductions be "reasonable" is that what is reasonable is a matter of opinion. Employers and workers would just not know where they stand if these amendments were accepted.
If we say in the statute that deductions must be "reasonable" the employer will never know if a deduction is lawful until he has had its lawfulness tested before an industrial tribunal. In practice, employers may simply not take the risk of having to waste a morning arguing the case before an industrial tribunal and simply punish breaches of discipline by dismissal. Surely it is enough simply to say that the terms of the basis on which the parties are prepared to go on offering and accepting employment are reasonable terms.
One must also recognise that the more we tie up people with statutory requirements which they must follow in deciding whether to offer and accept employment, the more likely it is that we shall deter would-be employers from offering employment at all.
Lord McCarthy: Not again.
Lord Trefgarne: With regret, I think that the practical effect of the amendments, however well-intentioned, would be to increase the number of dismissals, leave employers in an impossibly uncertain position and reduce the number of jobs on offer. I noticed considerable derision when I made that observation a moment ago. I wonder how many noble Lords opposite have been in the position, as I have, of being a small employer and being genuinely concerned about the bureaucracy that is attached to taking on new employees. It is a deterrent. Noble Lords opposite should not lose sight of that.
May I turn to the proposal for a code of practice? My noble friend the Secretary of State has considered closely whether it would be appropriate for him to issue guidance on good practice in drawing up contractual terms concerning deductions. On balance, he thinks that it would not. However, I can assure the Committee that the Department of Employment will issue guidance on the law before Part I comes into operation.
It is possible that a number of independent organisations such as the Institute of Personal
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Management or ACAS may wish to produce some guidance on good practice in framing contractual terms of deductions. ACAS is aware of the point which was raised during earlier stages of the Bill, but ACAS is an independent body governed by a council that includes TUC and CBI representatives. It is not an instrument of the Department of Employment. It would not be appropriate for Ministers to seek to direct ACAS in any way, but the ACAS council will doubtless consider the call for a code.
The noble Lord, Lord Wedderburn, and my noble friend Lord Coleraine referred to the case of Sealand Petroleum Company Ltd. v. Barratt. That case demonstrates, if I may say so, that a High Court case was required to determine whether the 1896 Act protected the employee. I believe that supports the proposition that the 1896 Act, after 90 years, is uncertain and therefore largely ineffective.
A number of questions have been asked about the concept of "reasonableness". I shall perhaps help the Committee with an example. Suppose that an employer is faced with a worker who has breached a safety regulation, perhaps putting other workers at risk. The employer does not wish to dismiss him and the contract says that workers can be fined for such breaches. Suppose that the employer fines the worker £10. Is that lawful? With the amendments, the employer does not know until he comes before an industrial tribunal. He spends a day arguing his case and is told that £5 was perhaps reasonable but not £10, or perhaps £10 but not £15. The employer just does not know where he stands. I have said that the Truck Acts have caused considerable confusion on that issue. At an earlier stage the noble and learned Lord, Lord Denning, was right to describe them as ineffective. They are a poor model.
I hope that those difficulties will have persuaded the Committee that we should not proceed in the way suggested in the amendments. I hope that the amendment will not be pressed.
4.15 p.m.
Lord Wedderburn of Charlton: It is a novel experience for me to hear, albeit from the noble and learned Lord, Lord Denning, that I am not going far enough, but I take his point. After consultation, my noble friends and I have come to certain conclusions. I shall say just two or three things about the arguments against our amendment. The noble Lord, Lord Trefgarne, speaking for the Government produced some astonishment. Every time there appears in this Chamber any Bill that has anything to do with the protection of workers, we are told that it must be bad because it will stop recruitment into jobs. There is no evidence of that in relation to matters which have come before us recently, any more than there is that jobs will be promoted by the Government's plan to charge workers £25 for going to an industrial tribunal which is contained in their latest policy document.
The noble Lord fell into another error which must be faced. He said that the amendment rests upon "reasonableness"; that what is reasonable is a matter of opinion; that no one would know where they stood and therefore we should not have such a law. Many laws stand on "reasonableness". On the noble Lord's

175
reasoning we should never have had a law on unfair dismissal. I am not sure that the Government want an unfair dismissal law. No doubt if they come to repeal it, that is the argument that they will use. It is a poor argument, because many parts of our law depend on what is reasonable. The Factory Acts, which the noble Lord cited frequently, depend upon the employer doing what is reasonable or what is different but perhaps more difficult, that which is reasonably practicable. No one suggests that we should repeal the Factory Acts because they include such formulae.
I do not hold such a low opinion of British employers, be they small or large, that I believe that they would not know in the vast majority of cases when a fine on a worker was reasonable and when it was unreasonable. I do not believe that. I do not believe that the noble Lord, Lord Trefgarne, when he was a small employer, would not have known in the vast majority of cases when he went home at night whether he had treated someone unfairly.
The noble Lord, Lord Coleraine, rightly took us to two cases. I did not cite the Bristow case because it seemed to me more concerned with the definition and interpretation of what is a fine, which does not appear in our formulation. We have had cases in the courts because petrol companies have gone in for scandalous practices. In 1896 the Home Secretary, replying to a debate on the Bill, said on 4th May at col. 523 of Hansard that he did not apprehend any vexatious litigation over the expression "fair and reasonable". He felt sure that one or two decisions by the courts of law would settle the meaning of that expression. In this context he was right. It is only when employers in this area have gone for such outrageous practices that cases have gone to the courts.
There has been a wages inspectorate. Although we all criticise it, over the years it has also maintained standards on the basis of a test of reasonableness. The noble Lord, Lord Campbell, spoke to other amendments. I shall reserve my comments until we come to those amendments. I must put one matter right in case it was my slip of the tongue rather than his mishearing. I hope that I did not say that all consent for workers by way of contract was a fiction. I hope I said that the groups of workers with whom we are dealing, the formal contract is more in the nature of a submission than of real consent. The noble and learned Lord, Lord Denning, gave other illustrations of when that is so.
If the noble Lord, Lord Campbell, will look at the report of bodies such as the Citizens Advice Bureaux he will find hundreds of cases described. They are not all by any means in retail shops or petrol stations. There are hundreds of cases with questionable deduction clauses in workers' contracts. As the North Warwickshire Citizens Advice Bureau put it, they are individuals who are desperate for employment, only too eager to sign the contract and only later when the deductions affect their living standards and their families do they fully realise the consequences. That is the reality of today. Those are the workers for whom we are worried.
My noble friends and I are not concerned about the precise order of the amendments on the Marshalled
176
List, but we are interested in workers in stock rooms, store rooms, petrol stations, shops and driving jobs who suffer those practices and whose families suffer them. If there be a sense in the Committee that the first amendment is in some ways too mild and insufficiently full, or not quite right, we shall not press the matter as there may be a better solution.
I understand that Amendment No. 2 will be pressed. As I read it, it demands that deductions must be in accordance with the standards of the code of practice. That is to say, the code of practice will not be merely a document suspended in some judicial levitation above employment practices but will be there, right in the middle. Its standards must be observed. It is possible that this is something that some Members of the Committee prefer. Because my noble friends and myself regard it as so important to establish the broad principle and because the two amendments, it seems to me, are very much at one, I beg leave, on the understanding that we can go into the Lobby on Amendment No. 2, to withdraw this amendment.
Amendment, by leave, withdrawn.
Lord Rochester Lord Rochester moved Amendment No. 2:
Page 1, line 9, at end insert ("is in accordance with the code of practice referred to in subsection (2A) below, and")
The noble Lord said: I have already spoken to this amendment, and I sense that the Committee wishes to reach a conclusion on the matter in general. I should like, briefly, to thank all noble Lords who were good enough to contribute to the discussion on the amendment to which I spoke earlier. I respect very much the opinion of the noble Lord, Lord Campbell of Alloway, who criticised my amendment on grounds both of form and substance. I felt, if I may respectfully say so, that, on substance, the noble and learned Lord, Lord Denning, demolished that argument pretty effectively. If it was only a matter of form, and if there was some imperfection in the code that could be improved upon, that is one thing. It could readily be done, I am sure, at another stage. But it is the principle, clearly, with which the Committee is concerned. It is that, I suggest, to which we now have regard.
I was particularly grateful to the two noble Lords on the other side of the Committee, who spoke in favour of the general proposition. I admired very much the manner in which the noble Lord, Lord Coleraine, spoke. Clearly, the noble Lord has considerable knowledge of the subject. I was greatly disappointed by the response of the noble Lord, Lord Trefgarne, who seemed to be saying, in effect, that what the employer and the employee agreed between them on the contract to be followed was sacrosanct. I do not regard that as nearly good enough. What is required is that employees, often, as stated at an earlier stage, among the most lowly paid, should be adequately protected in terms of deductions from wages being fair and reasonable. The noble Lord the Minister said that it was the intention that ACAS should offer some guidance on this subject. I do not believe that this is good enough. What we want to see is something inserted in the Bill to that effect.
I am grateful to the noble Lord, Lord Wedderburn, for agreeing in the circumstances and in the light of the

177
discussion that has taken place, to withdraw his amendment in favour of mine. I wish therefore to move the amendment.
Lord Trefgarne: Before the noble Lord decides what to do with his amendment, he has, I believe, slightly misunderstood what I said during my remarks. I was not in the least intending to be unreceptive to the proposal that he made. I said that the Department of Employment would be issuing guidance before Part I of the Bill became law. I pointed to at least two bodies that might wish to prepare a code of practice that would further assist employers and employees operating the provisions of this measure. I am not sure how much further the noble Lord wants me to go. If it helps him, I would be happy to agree to look again at the possibility of my noble friend preparing a code of practice of his own which I believe would go some way to meeting the noble Lord's concern.
Lord Rochester: I thank the noble Lord for what he said. I thought that I had made plain at an earlier stage that we are anxious—I believe that I speak for most, perhaps all, noble Lords on this side of the Committee and for a number on the other side—that something should be written into the Bill upholding the principle that has been enunciated this afternoon. I wish both to move and to press the amendment.
4.26 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 101; Not-Contents, 125.

DIVISION NO.1

CONTENTS

Airedale, L.

Harris of Greenwich, L.

Amherst, E.

Hatch of Lusby, L.

Aylestone, L.

Heycock, L.

Bacon, B.

Hirshfield, L.

Banks, L.

Hooson, L.

Birk, B.

Houghton of Sowerby, L.

Blease, L.

Hughes, L.

Blyton, L.

Hunt, L.

Boston of Faversham, L.

Irving of Dartford, L.

Brockway, L.

Jenkins of Putney, L.

Brooks of Tremorfa, L.

Jessel, L.

Bruce of Donington, L.

John-Mackie, L.

Burton of Coventry, B.

Kaldor, L.

Carmichael of Kelvingrove, L.

Kilbracken, L.

Chitnis, L.

Kilmarnock, L.

Cledwyn of Penrhos, L.

Kinloss, Ly.

Coleraine, L.

Kirkhill, L.

Crawshaw of Aintree, L.

Lawrence, L.

David, B. [Teller.]

Leatherland, L.

Davies of Penrhys, L.

Listowel, E.

Dean of Beswick, L.

Lloyd of Kilgerran, L.

Denington, B.

Lockwood, B.

Denning, L.

Lovell-Davis, L.

Diamond, L.

McCarthy, L.

Donaldson of Kingsbridge, L.

McNair, L.

Elwyn-Jones, L.

Mar, C.

Ennals, L.

Mayhew, L.

Ewart-Biggs, B.

Milverton, L.

Ezra, L.

Mishcon, L.

Falkender, B.

Morton of Shuna, L.

Fisher of Rednal, B.

Mulley, L.

Gallacher, L.

Murray of Epping Forest, L.

Glenamara, L.

Nicol, B.

Graham of Edmonton, L.

Northfield, L.

Grey, E.

Oram, L.

Hampton, L.

Parry, L.

Hanworth, V.

Ponsonby of Shulbrede, L.

178

Rhodes, L.

Taylor of Mansfield, L.

Ritchie of Dundee, L.

Tordoff, L.

Rochester, L. [Teller.]

Turner of Camden, L.

Ross of Marnock, L.

Underhill, L.

Sainsbury, L.

Walston, L.

Seear, B.

Wedderburn of Charlton, L.

Shackleton, L.

Wells-Pestell, L.

Shepherd, L.

Whaddon, L.

Silkin of Dulwich, L.

White, B.

Simon, V.

Williams of Elvel, L.

Stallard, L.

Wilson of Langside, L.

Stoddart of Swindon, L.

Wilson of Rievaulx, L.

Strabolgi, L.

Winstanley, L.

Taylor of Blackburn, L.

NOT-CONTENTS

Allerton, L.

Lothian, M.

Ampthill, L.

Lucas of Chilworth, L.

Arran, E.

Luke, L.

Auckland, L.

Lurgan, L.

Belhaven and Stenton, L.

McAlpine of West Green, L.

Belstead, L.

MacLehose of Beoch, L.

Bessborough, E.

Macleod of Borve, B.

Boyd-Carpenter, L.

Mancroft, L.

Brabazon of Tara, L.

Marley, L.

Brookes, L.

Marsh, L.

Brougham and Vaux, L.

Masham of Ilton, B.

Broxbourne, L.

Maude of Stratford-upon-

Caccia, L.

Avon, L.

Cameron of Lochbroom, L.

Merrivale, L.

Campbell of Alloway, L.

Middleton, L.

Carnegy of Lour, B.

Molson, L.

Cathcart, E.

Monk Bretton, L.

Constantine of Stanmore, L.

Montgomery of Alamein, V.

Cottesloe, L.

Morris, L.

Cowley, E.

Mottistone, L.

Cox, B.

Murton of Lindisfarne, L.

Cross, V.

Napier and Ettrick, L.

Cullen of Ashbourne, L.

Nugent of Guildford, L.

Dacre of Glanton, L.

Onslow, E.

Davidson, V.

Pender, L.

De Freyne, L.

Perth, E.

Denham, L. [Teller.]

Porritt, L.

Dilhorne, V.

Portland, D.

Dormer L.

Reay, L.

Dundee, E.

Rochdale, V.

Eccles, V.

Rodney, L.

Elles, B.

St. Aldwyn, E.

Elliott of Morpeth, L.

St. Davids, V.

Elton, L.

Sanderson of Bowden, L.

Fanshawe of Richmond, L.

Sandford, L.

Forester, L.

Sandys, L.

Fraser of Kilmorack, L.

Savile, L.

Gainford, L.

Selborne, E.

Gardner of Parkes, B.

Sempill, Ly.

Glanusk, L.

Shannon, E.

Glenarthur, L.

Sharples, B.

Gridley, L.

Shaughnessy, L.

Halsbury, E.

Skelmersdale, L.

Harmar-Nicholls, L.

Strathcarron, L.

Hives, L.

Strathcona and Mount Royal,

Holderness, L.

L.

Home of the Hirsel, L.

Swinton, E. [Teller.]

Hood, V.

Thomas of Swynnerton, L.

Hooper, B.

Thomeycroft, L.

Hunter of Newington, L.

Tranmire, L.

Hylton-Foster, B.

Trefgarne, L.

Inglewood, L.

Trenchard, V.

Kaberry of Adel, L.

Trumpington, B.

Killearn, L.

Vaux of Harrowden, L.

Kimball, L.

Vickers, B.

Kinnaird, L.

Vinson, L.

Kintore, E.

Vivian, L.

Knollys, V.

Westbury, L.

Lane-Fox, B.

Whitelaw, V.

Lauderdale, E.

Wise, L.

Layton, L.

Young, B.

Lindsey and Abingdon, E.

Young of Graffham, L.

Lloyd of Hampstead, L.

Zouche of Haryngworth, L.

Long. V.

Resolved in the negative, and amendment disagreed to accordingly.
Viscount Long: My Lords, I think that it would be appropriate at this moment to take the Statement. Therefore, I beg to move that this House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Chernobyl Accident: Movement of Sheep, Scotland
4.35 p.m.
Viscount Davidson: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable and learned friend the Secretary of State for Scotland. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a Statement on the control on the movement and slaughter of sheep in Scotland.
The results of tests on sheep in slaughterhouses in Scotland, the latest findings from which were published yesterday, give no cause for concern. We now have results of tests on young lambs in Scotland. These results are being published today.
"Generally they are satisfactory. No readings have been obtained comparable to the highest in North Wales and Cumbria, but there are five readings over 1,000 Bq/kg for caesium 134 and caesium 137 together, which is the limit at which by international recommendation action should be considered. One of these readings, the lowest of the five, comes from Easter Ross and, at 1,017 Bq/kg, is within the margin of sampling error. Three of the other readings were found in Dumfries and Galloway, including the highest at 1,272 Bq/kg, and the remaining reading is from Arran.
"The animals tested were only two to three months old and will not be ready for market for some weeks yet, by which time the level of radioactivity may be expected to have declined well below the 1,000 Bq/kg level. I can say categorically therefore that there is no danger to public health and no reason for consumers to refrain from purchasing and eating lamb.
"It is Government policy to insist on the highest levels of safety, and, in order to keep under supervision lambs in those areas of Scotland where relatively high levels of radioactivity have been identified, I have made an order which will be laid before Parliament to come into effect today to prohibit for the next 21 days the movement and slaughter of sheep within Dumfries and Galloway, Arran and Easter Ross.
"Monitoring in these and other areas will continue and the restrictions will be reduced or removed as soon as testing confirms the expected fall in levels.
"I recognise that these measures may cause some interference with the marketing plans of some farmers in the areas concerned. I am sure they will understand why this action is being taken and in this connection I must pay tribute to the responsible and co-operative attitude shown by the National
180
Farmers' Union of Scotland. If it should prove necessary, the Government will be prepared to discuss cases of compensation for severe loss in particular circumstances to specific farmers."
My Lords, that concludes the Statement.
Lord John-Mackie: My Lords, there is not much that one can say which was not said on Friday when the Statement on Wales and Cumbria was made. However, I think that the importance of letting the public know what is happening should be re-emphasised, and the noble Viscount has done so, because there were some considerable scare stories in the press last Saturday morning. However, this is a difficult task to carry out, and I understand that there has already been a drop in the price of lamb. My own wife's reaction is that she will not buy lamb unless it is New Zealand lamb. This has a rolling effect which is seen in the fact that lamb prices have come down, in spite of the fact that many of these lambs are not yet of marketable size, although in 21 days they can come a long way.
I should like to ask the Minister why, only three days after the Statement on Friday, we have this Statement. I hope that the Government have not been sitting on these reports because it is rather important that farmers should know all along the line what is going on. I hope that that is not the case here.
The matter of compensation will be very important because all the areas which have been mentioned, apart from Easter Ross, almost entirely rely on at least the next two months for the sale of store and fat lambs for their total income for the year. Therefore, it is very important indeed that this matter should be looked into very carefully and that we be ready to give help when it is required.
On several previous occasions when compensation has been paid, the matter has dragged on for a long time and farmers have had to wait for their money. I re-emphasise that these are areas where the farmers' income comes solely from sheep and if we have another Statement from the Government, it will be very serious for them. I hope that the Minister can assure us that there will not be another Statement in the near future because that would give rise to a very serious situation as it would begin to cover all the lamb-producing areas in the country.
Lord Hooson: My Lords, it is obvious that in circumstances of this kind the Government, in the public interest, must err on the side of caution, and this the Government have done. Would the noble Viscount confirm that there is strict monitoring going on, and that in fact the lambs in this and the surrounding areas will be tested again to reassure the public, and that the results will be published as soon as it is done?
With regard to the question of compensation, these are innocent farmers, very often with one cash crop in the year, and that is lamb. The words used in this Statement in respect of compensation might cause considerable alarm. It is clear that this interference with the normal marketing process will cause loss to farmers. For example, if lambs are kept back for three weeks they put on excessive fat and will not grade properly.

181
The words used in the Statement are:
"If it should prove necessary the Government will be prepared to discuss cases of compensation for severe loss".
Should not the Government compensate for any loss? Why should it be confined to particular circumstances with specific farmers? If fanners as a result of these actions are going to suffer loss, surely the Government should compensate, and look to the Soviet Union for compensation nationally? Would the noble Viscount not agree with that?
Viscount Davidson: My Lords, I am grateful to both the noble Lord, Lord John-Mackie, and the noble Lord, Lord Hooson, for their reception of this Statement. In general, I would agree with the noble Lord, Lord John-Mackie, that this problem was discussed at length on Friday when my noble friend Lord Belstead repeated a Statement made in another place by my right honourable friend the Minister of Agriculture, Fisheries and Food.
I do not think that I can add much to what my noble friend then said. But on certain specific points, the noble Lord, Lord John-Mackie, asked why was the order not laid last Friday. We said then that we would act on the basis of monitoring data, and that is what we have done. Following on the monitoring topic, I would assure the noble Lord, Lord Hooson, that we are keeping monitoring on a continuous basis and will publish the results.
The noble Lord, Lord John-Mackie, raised the subject of consumption. If it is any help, perhaps I may just give him a scientific answer from my brief and not from my brain. At 1,000 Becquerels per kilogram of total caesium, which is caesium 137 plus caesium 134, the total does in a year to the average consumer, assuming he eats meat at the average consumption rate throughout the year of five kilograms, would be 0·15 millisieverts. This compares with an annual does from natural sources of 2 millisieverts, to which we are all subjected. Therefore, there is no danger whatsoever.
On the question of compensation, which both the noble Lord, Lord John-Mackie, and the noble Lord, Lord Hooson, raised, I take note of what they said. This is always a difficult problem in these matters. Our intention is that any distruption will be minimal disruption, and the position on compensation was spelt out by my right honourable friend the Minister of Agricuture. If it should prove necessary, the Government will be prepared to discuss cases of compensation for severe loss in particular circumstances to specific farmers, and more than that I cannot say at the moment.
Lord Kimball: My Lords, could my noble friend say why sheep only? Are we monitoring the position as regards fat cattle? Certainly in Easter Ross some fat cattle will be coming forward for slaughter in the near future. Can my noble friend say a word on the position of monitoring of cattle?
Viscount Davidson: My Lords, the monitoring results so far—and there has been monitoring for cattle as well—show that there is no cause for concern withother food products at the moment. The point is that he young lambs have been feeding on the
182
contaminated pastures and have been ingesting a great amount of food, and that is why they have been particularly susceptible to risk.
Lord Ross of Marnock: My Lords, am I right in thinking that the Government took action as soon as they received the information in respect of the recent analysis? But it is rather obscure to say that there is no cause for concern. There may be no cause for concern to the consumer; but there is considerable cause for concern to the farmer, especially when the noble Viscount suggests that there may be some disruption of the market.
You cannot have a policy of restricting movement and no slaughter without seriously restricting the market for those hill sheep farmers affected. What percentage of the stock of sheep in Scotland is held in Arran? It is not very high, I would fancy. But when you think of Dumfries and Galloway particularly, and Easter Ross, it must be getting well on to 15 per cent. of the whole stock. That is a considerable disruption.
Can the noble Viscount tell me one other thing? When he talked about a restriction on movement and slaughter, is this absolute? Is there to be no movement at all even within an area? Can he give us any indication of what is going to be the basis of compensation when that is dealt with? Compensation will be needed, and needed speedily when we are dealing with what is an acceptable—and readily acceptable—cash crop for farmers who are going to be denied it, having had a fairly rough winter already.
Viscount Davidson: My Lords, in reply to the noble Lord, Lord Ross of Marnock, I do not have the figures of the number of sheep affected. On the effect of the order, in Dumfries and Galloway it forbids for a period of 21 days, beginning on 24th June, the movement of sheep off farms and the slaughter of sheep except with the consent of the department. Slaughter will be permitted for welfare reasons, and this is already provided for in the order, on condition that the meat does not …. There is no end to that sentence. I apologise for the fact that my noble friend the Minister of State is in Inverness today. I am afraid I forget the noble Lord's other question. Perhaps he would remind me.
Lord Ross of Marnock: My Lords, I asked about the stock, and whether there was an absolute bar on the movement and slaughter of stock, and I gather that there is not provided something or other that we do not know about, and that the Minister has not been adequately briefed about. I asked about the effect of compensation. There has already been a loss and a drop in price. It may not affect just these areas. It may be general through all the lamb and store lamb markets at the present time. The other question was about the basis of compensation, and whether it will be paid quickly.
Viscount Davidson: My Lords, I understand. What I meant to say earlier when I was talking about no cause for concern was that I was talking about the consumer. There is of course considerable cause for concern for the farmers affected here. I am certain that my right honourable friend will bear that in mind and do his best to assess and pay the compensation to those who have really suffered from this tragedy.
Lord Boyd-Carpenter: My Lords, if the Government find it necessary to pay compensation in respect of Scotland, Cumbria, or of Wales, will they seek reimbursement of the cost of that from the Government of the USSR in view of the fact that the whole problem has been created by a failure in the industrial system of that country?
Viscount Davidson: My Lords, I think all I can say to my noble friend is that I shall pass on his question to my right honourable friend.
Lord McNair: My Lords, may I ask the noble Viscount to tell me whether the monitoring of cattle, to which he referred, includes the monitoring of milk, and if so, with what results?
Viscount Davidson: My Lords, I am sorry but I do not have the answer with me.
Lord Cledwyn of Penrhos: My Lords, while I agree with what my noble friend Lord Ross of Marnock has said about the producer, may I ask whether the noble Viscount is aware that it will ease public concern considerably if he makes it clear that within the 21 days referred to in the Statement the amount of caesium in the lambs will have reduced sufficiently to make it safe to slaughter and to eat the lamb? That is the point in the public mind that has not been made clear. If he can say that today, it will be of considerable benefit.
Viscount Davidson: My Lords, I can state categori-cally that that is what we are expecting to happen; that the amount of caesium will be reduced over the next 21 days.
Lord John-Mackie: My Lords, may I ask the noble Viscount about another point which might worry farmers? If the price comes down I hope the Government will not rely on the variable premium to make it up. There is a limit to the variable premium and it would not make up a loss of 25 per cent., which is the figure stated. I do not know how accurate that figure is, but it has been quoted in some of the reliable press. That is something that must be carefully watched: the Government, who are pretty good at this kind of thing, relying on the variable premium, which I do not think they can do in this case.
Viscount Davidson: My Lords, I am grateful to the noble Lord, Lord John-Mackie. I shall certainly draw his remarks to the attention of my right honourable friend.

Wages Bill
4.50 p.m.
House again in Committee on Clause 1.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 3:
Page 1, line 10, leave out ("one of)
The noble Lord said: In moving this amendment I wish to speak also to Amendment No. 4. Now that we have settled the broad issue that no test overall of
184
reasonableness is to be imported into the control of deductions, it is perhaps more important than ever to look with great care at just what the Government have put into their Bill and at their main plank of contractual arrangements being clear.
These amendments go to a puzzle as we see it. It can be put shortly in this way: deductions are to be allowed under the Bill if they are authorised either by statutory provision or by provisions in the worker's contract. That one would understand, but then there is a further wheel to the coach, an alternative to the provisions allowed by contract, those matters to which the worker has previously signified in writing his agreement. If he signifies his agreement in writing in any formal way, as one would expect it to be, would that not become a variation of the contract? If it is a variation of the contract it falls within paragraph (a) and paragraph (b) is not needed. Paragraph (b) is clearly needed where the writing is not imported into the contract; a writing standing alone which would not be legally binding unless it were a sealed deed. What kind of documents do the Government have in mind that would not be a part of a contract? Is this a document where there is perhaps a homeworker who does not have a contract? That is a difficult example to take because the whole of Part 1 of the Bill is based on a worker who does have a contract and the home worker without a contract is not brought in. All we are left with is this very uncertain area of signification in writing of consent or agreement that is not contractual because then it would be within paragraph (a).
At this stage so that we can consider the matter—because our efforts have not been availing in trying to find a clear explanation in another place in its debates on this matter—we ask the Government to clarify what is meant so that the matter can be considered further. I beg to move.
The Deputy Chairman of Committees (Lord Nugent of Guildford): Before I put the Question, I should explain, as the noble Lord was speaking to Amendment No. 4, that if Amendment No. 4 were agreed to it would pre-empt Amendments Nos. 5 and 6 so that I should not be able to call them as well.
Lord Trefgarne: As the noble Lord has explained, the amendments restructure Clause 1(1), which provides that the basic protection for workers that deductions from wages (or payments by a worker to his employer) are unlawful unless provided for in a statutory provision—for example income tax—in the contract or by the written consent of the worker.
Incidentally, I believe that Amendments Nos. 10 and 11 come within this group as well. I notice that the noble Lord, Lord McCarthy, nodding in assent.
The effect of these amendments would be to remove written agreement as a method of authorising a deduction or payment. But it would create great difficulties both for employers and workers if the route of authorising a deduction by the written agreement of the worker was closed. For example, a set of deductions to recover a loan to purchase a season ticket could then only be authorised by varying the contract, which would be a needlessly cumbersome method of achieving a result desired by both parties. But in so far as the method of varying the contract was

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by the agreement of the worker the steps involved would amount to much the same thing except that agreement would not necessarily be in writing—so the standard of protection of the worker would, I think, be reduced.
I hope that in the light of these two difficulties the noble Lord will not wish to press his amendment.
Lord Wedderburn of Charlton: I am grateful to the Minister for that explanation. It is one that I followed in one respect, namely that if the effect of the amendments was to reduce the protection of the worker we certainly should not wish to move it. But, in a phrase, the objective and effect of the amendments—I apologise to the Committee and to the Minister because Amendments Nos. 10 and 11 on the new numbering are those we agreed should be considered as they involve the same thing—would not be to remove written agreement from the Bill. Written agreement is presumably contractual. It is intending that the parties should be bound. If I have a contract of employment and a document is put before me saying "Here is £100 as a loan to buy your season ticket. Will you agree to that being deducted from your wages?" and I accept, whether by signature or otherwise—that is a point we are coming to—then it is difficult to understand how that does not vary the relationship: my consideration being my going on working on those terms and the employer's being employing me on those varied terms. That is a variation of the contract of employment. I could imagine very bizarre documents that would not be, but the noble Lord the Minister did not put any of those to us. I am still mystified.
This is an important matter and not just a technical one. It is not a technical matter because if the Bill stays in this state it will suggest to employers and their advisers that there is an important category of writing which can be the foundation of lawful deductions which, because it is in paragraph (b) is not necessarily contractual and not a variation of the contract, not within the contractual sphere. The example that the Minister gave, a loan to purchase a season ticket with a written agreement to repay by deduction, is plainly a variation of the contract of employment. So the only possibility it would seem to me, with respect, would be agreements which are collateral to the contract of employment. That is what I expected the Minister to say. If this is aimed at contracts which are collateral to the contract of employment then Clause 1(1)(b) assumes quite a serious area of danger and problem because then it can go outside the employment relationship in new ways. For the moment, hoping that the Government will be able to say something a little clearer on what are the writings which are not contractual and come within paragraph (b) and do not come within paragraph (a) when we come to the point once again on Report, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 4 not moved.]
5 p.m.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 5:
Page 1, line 14, after ("signified") insert ("to the employer").
The noble Lord said: In moving Amendment No. 5, with the leave of the Committee I shall also speak to Amendment No. 6. There are two very short points here. They both relate to paragraph (b) and they may be put in this way. We are now on the writing that is not contractual, which is within paragraph (b), and not within paragraph (a), by which the worker signifies his assent.
First, in signifying assent, will he not sign the document? If it is not signed, will there not be uncertainty about his assent, his "agreement or consent", as the paragraph has it? So would it not be better to have it signed, to require signature? The Government are concerned about uncertainty. We heard that in relation to Amendment No. 1. Surely signature should be required.
With regard to the first and main amendment that I am moving, since the worker is so signifying his consent, to whom is he signifying it? Everyone will assume that he is signifying his assent to the employer. But that is not what the paragraph says. That is a much more serious problem because one can well imagine a document which is proffered by the worker to someone else or perhaps a document proffered by someone else, perhaps a customer or perhaps someone in a commercial relationship, to the worker and that later being relied upon by the employer and the worker saying, "I didn't signify my assent to you in that document".
Many such situations can be imagined. They would always be unusual ones, but the law is concerned with the unusual situation; the law is concerned with the pathological rather then the normal. Therefore, in order to avoid uncertainty, will the Government consider perhaps asking that in paragraph (b) the writing, the written document, should be something which signifies consent to the employer specifically and clearly. I beg to move.
Lord Trefgarne: Both these amendments seek to change the provision in Clause 1(1) that a deduction is authorised if the worker,
"has previously signified in writing his agreement or consent to the making of it".
Amendment No. 5 requires that the worker has signified his agreement "to the employer". But the employer could not make a deduction authorised by this provision unless he knew that the worker has signified his consent. So the worker must in practice signify consent to the employer or to a third party, but at the same time informing the employer of this consent, which surely amounts to the same thing. If the worker gave consent to a third party but neglected to inform the employer, the employer obviously could not make a deduction authorised by such a consent. I assure the Committee that the additional words in Amendment No. 5 add nothing in that context of practical value.
Amendment No. 6 requires the worker to sign the agreement or consent he has given in writing. But the clause already requires the worker to give his consent in writing, which means that the worker must write a consent or sign a consent written by someone else. I see no reason to say that a consent written out by the worker but not signed is not a valid consent, and the more complicated we make these provisions, the more

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Likely it is that an employer will trip up on a small technicality and find himself having to repay to the worker a perfectly justifiable deduction from wages. I believe that these amendments add nothing and, arguably, create a rather confused Subsection. I hope that the noble Lord will not press them.
Lord Wedderburn of Charlton: Sometimes I think it difficult to make these subsections rather more confused than they are, but no doubt if we have achieved that, it has not been a very good step to take. The noble Lord the Minister's objection to the amendments seems to be that they change the provisions of the Bill. That, of course, is the objective of amendments to a Bill. Let us take the two examples that he gave, because they are important. He said —and I follow him a long way—that the agreement must be signified in such a way that the employer knows about it. So it can either be signified to the employer or to a third party and, so long as the employer knows about it, then that is good enough. Well, if the employee does not inform the employer, that he says, would create a problem.
But let us suppose that the third party then informed the employer. The Minister's example has to have added to it the rider that if a third party informed the employer then, on his hypothesis, that would satisfy paragraph (b). How uncertain! The noble Lord the Minister ended up by saying that in practice therefore it would be all right. Every time you hear the draftsman of a clause say, "Oh, in practice, it will be all right", you can be sure that there is something wrong with the clause. No one should ever have to defend a clause with the words, "If it is not right on paper, it will be all right in practice". A clause should be clear, a clause should cut out all possible—it cannot ever cut out all—predictable uncertainties. And there are two here.
The first the noble Lord did not meet—except merely to say that it would be all right in practice. As for the second, the noble Lord the Minister says that the worker must sign a document drawn up by someone else—I accept that—or draw up his own document which he need not sign. Why not? Why not say that it should be signed? Then everyone would know where they stand. For example, we have a document drawn up by, say, a noble Lord. I say, "This is your document". He says, "But I haven't signed it. It's not my handwriting". An element of uncertainty immediately appears.
Lord Trefgarne: I understand the point that the noble Lord is trying to make. I think it will generally be a matter of fact whether or not the employee actually wrote out the document concerned, if he did not sign it. It would be presumed generally in such circumstances—and I guess that they will be pretty unusual ones—that he had written it out in the presence of his employer who therefore knew that it was his document and that he was thereby assenting to the actions to which this provision applied. I understand the anxiety in the noble Lord's mind on this matter. If the noble Lord will allow me, perhaps I may look into this a little further, particularly in the context of a document which the employee has written
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out himself, to see whether there is any way in which I can meet the noble Lord's anxiety.
Lord Wedderburn of Charlton: I am glad to have that qualified assurance, as perhaps I should call it, from the noble Lord the Minister and on that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 6 and 7 not moved.]
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 8:
Page 1, line 15, at end insert—
("and unless the deduction is made by reason of dishonesty, default or other conduct on the part of the worker.").
The noble Lord said: I beg to move Amendment No. 8, which stands in my name and in the names of my noble friends Lord Wedderburn of Charlton and Lord McCarthy. I think it would be convenient to take with this amendment Amendments Nos. 29 and 30. As I read the Bill, Clause 1 as it stands gives the employer carte blanche to make deductions from an employee's wages provided that the employee has previously signified his consent or agreement in writing. Those deductions can arise not from any action on the part of the worker or employee himself but from action on the part of others. That is the reason for this amendment.
Once the employee has made his agreement he cannot retract from that; and we must bear in mind that the employee probably made that agreement at the commencement of his employment and, once having made it, it is unlikely that he will be able to alter it unless there is a provision for review within the agreement or if the employer would himself agree or perhaps if the employer gave the employee the right to renegotiate the agreement without fear of victimisation or dismissal.
Clearly, as the noble and learned Lord, Lord Denning, pointed out in our first debate, the employee is put in an impossibly weak position when he is applying for a job or when he is starting his job. The employer consequently is put in an unacceptably strong position. For a youngster or a person who has been unemployed for a long period to be asked to sign such an agreement before he knows the implications and what his job entails is a shameful strengthening of the employer's position and a weakening of that of the employee. But once he has signed the agreement the employee is trapped. He has not realised, and probably will not realise until he begins work, that his employer can fine him not only for his own dishonesty or default or indeed for any conduct on his own part but also for such behaviour of others over whose actions he has no control.
We have heard, for example, of the case of the attendant at a petrol station. My noble friend Lord Wedderburn of Charlton and the noble Lord, Lord Coleraine, referred to cases of forecourt attendants. We heard of the case of a petrol station attendant controlling perhaps six pumps. It is no easy task during a busy period to control six pumps. Yet if a dishonest motorist fills his tank and roars off without paying and the attendant fails to note his number—which in any case may be obscured by dirt or, at night, may not be

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properly illuminated — the poor attendant, under Clause 1 of this Bill, if the employer so decides and the employee has agreed at the beginning of this employment, has to pay up for a dishonest motorist clearing off without paying for his petrol. He is being punished not for his own dishonesty but for the dishonesty of someone else. Such a situation is unfair and unjust. After all, it is not really the responsibility of the employee to insure his employer against the thefts of others but, as the clause stands, that is precisely what employees can be required to do.
That is not all. It will be possible, particularly in respect of stock discrepancies, for an employer to fine his employees for the dishonesty, misdemeanours and inefficiencies of others, perhaps even of himself. Certainly it will be all too easy for an employer to be lax in the matter of proper control mechanisms if any losses are to be made up by his employees. Why in such circumstances should the employer put himself to the trouble and expense of imposing proper control disciplines if in fact he can draw money at will from his employees?
This clause and this Bill are heavily weighted in favour of the employers and against the employees. They penalise financially the poorest section of the workforce and those whose very status and occupation indicate that they need most protection. Our amendment seeks to somewhat redress the balance between employer and employee and to protect the weakest, in bargaining terms, among the country's workforce. I commend the amendment to the Committee and I beg to move.
Lord Trefgarne: The effect of this Amendment, No. 8, will be to add a further restriction on contractual or agreed deductions or payments. It would ban deductions that are not made by reason of dishonesty, default or other misconduct on the part of the worker. This would ban a great many perfectly reasonable deductions: for example, to recover loans or to pay subscriptions to a company's social club.
Under the Bill as it stands, the worker can be made to compensate the employer for a loss or shortage only if the worker has a contractual responsibility for the loss or shortage; that is, if his contract makes clear that he can be asked to compensate the employer for the loss or shortage. This is clear law and it is reasonable that the parties should agree their own rules in the contract, and stick to them. It is quite reasonable that where a worker has accepted a contractual responsibility for losses or for the cash that is the lifeline of the business, he should meet such loses or shortages.
The Government have considered these amendments carefully but we have concluded that they would lead to uncertainty and complexity and would possibly cost jobs. The amendments would require the employer to seek to determine responsibility in fact for losses and shortages, rather than simply agreeing with the worker to make a deduction and drawing a line under the matter. This might make the employer, faced with continuing unexplained shortages that he had to meet as he could not prove dishonesty, more likely simply to dismiss the worker concerned.
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The amendments would lead to complex and lengthy tribunal cases, investigating who was in fact responsible for particular losses or shortages. The more we complicate the Bill with statutory constraints on the ability of employers to offer and workers to accept jobs on terms they can agree, the more likely it is that the number of jobs on offer will be reduced. I ask the Committee to accept that, however well-intentioned, the amendments could lead to complex-ity in law and to the loss of jobs.
5.15 p.m.
Lord Rochester: I have some sympathy with this amendment. There is a widely-held view that any deductions for cash or stock deficiencies are outmoded and should be replaced by better management and better methods of control. I think that was one of the points that the noble Lord, Lord Stoddart of Swindon, was making. My fear is that incompetent management may seek to hide that incompetence at the expense of the employees. Under the Bill it is possible for poor management to make deductions from wages rather than carrying out sound practices such as, for example, moving employees thought to be responsible for deficiencies in cash or stock from one shift to another. Our aim in the long term should surely be to get employers to accept that it is their responsibility to establish procedures under which their employees are protected from what may be the misdeeds of others, rather than taking refuge in penalising people who may not themselves be at fault.
I am in a difficulty here because, as I have already indicated in the general discussion on the first two amendments, I am not happy, any more than is the Minister, about doing something (except in the most exceptional circumstances) which violates, as it were, the contract between the employer and the employee. I rather hope that in those circumstances this particular amendment will not be pressed but that the thought which underlies it may perhaps be introduced at some later stage when I may find it easier to support it.
Lord Denning: I am afraid that I do not support the amendment. It is not wise to put rigid rules such as this into the statute itself. As I indicated earlier, it is really much better for there to be a code of practice or code of guidance so that the matter may be considered as to what is fair and reasonable in all the circumstances. I hope the tribunal will be sufficiently interested and have wide enough powers to decide what is fair and reasonable. I would not hamper it by having through-out this Bill rigid rules laid down for it, or for the employer, to operate on.
Lord Murray of Epping Forest: Very briefly, may I say that I would not wish it to be assumed that silence on these Benches implies, in any sense, acceptance of the statements or unsupported assertions made by the Minister; for example, the reiteration of the assertion that this measure is designed to produce jobs. There is not a shred of evidence that measures of this kind defend jobs. If his argument is that this measure is necessary to defend the job of a defaulter who other-wise might be taken to a tribunal, the answer is that if there is dishonesty his job should be at stake. If there is alleged dishonesty, he should have the right to go to

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a tribunal and defend himself there. I make the point merely because, if the Minister repeats something many times, that does not mean that we are accepting the basis of his argument.
Lord Harmar-Nicholls: What the Minister said is borne out every day with people who have to run businesses, particularly small businesses. When one is thinking of opening a department in another town, particularly when people have to handle money and one has to pay for the stock which is to be put into the shop, one must be satisfied with the people who will be handling money without day-to-day supervision, because one cannot always transfer top, responsible management to a new department in another town. The employer must feel that he has some sanction which will ensure that the business is being properly run, as regards the cash that comes over the counter.
The arrangement that you come to, perfectly properly, is that if the money taken does not conform with the normal percentages of the other branches, and if there are no circumstances which make that new branch different from the others, the employee knows that he will be responsible for any discrepancies that cannot be accounted for. That makes him that much more efficient. If you do not have that sanction, you think twice about risking your capital in the stock, in the rent and in all the other things that go with opening up new premises. That is common form.
I am interested, too, in a group of hotels where people are in charge of various departments and cash is coming in. If the money taken at the door for a dance, where there is no real check other than the tickets that have been handed in, is short somebody is responsible for the discrepancy. The people who take on that responsibility know that and they are that much more keen to see that the takings at the door conform with the tickets. If there are special circumstances, such as rowdyism, an employer takes that into account.
However, I do not think there is any need for the state to come in on this. There is no need for a statute, which means all kinds of pettifogging forms having to be filled in and procedures having to be followed. The Minister is absolutely right. I have great respect for the noble Lord who has just spoken as a trade union leader. He knows his men and it is right that he should want to defend them from any kind of interference by anybody. But I am on the other side of the counter and I know that, before you take a risk and put in investments, you want certain protections. This is a very sensible one which you enter into with the employee concerned. If it is not there, it will interfere with your decision as to whether you open a department, and therefore it will interfere with the employment of certain people.
Lord Stoddart of Swindon: It has been an interesting short debate. I think I can understand the reservations of the noble and learned Lord, Lord Denning, and the noble Lord, Lord Rochester. I understand their preference for the insertion of what is fair and reasonable and a code of practice. We had the opportunity to vote for just those things, but unfortunately the Committee in its wisdom or
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otherwise decided that it could not agree to that. Had it done so, this amendment would have been completely unnecessary and we should have certainly withdrawn it. But I understand those reservations and, in any event, I shall probably not press the amendment.
The noble Lord, Lord Harmar-Nicholls, seems to think that employers in the retail trade, and in other such trades, should have this sanction of fining their workers, because that is what it amounts to—
Lord Harmar-Nicholls: No.
Lord Stoddart of Swindon: Yes, indeed. Just listen for a minute. He is proposing that there should be a sanction in those trades of a fine to be placed on the workers quite indiscriminately in respect of defalcations, shortages in the till or shortages of stock. That is what he said. I was listening to him very closely.
Lord Harmar-Nicholls: The noble Lord's interpretation of what I said bears no relation at all to the words that I used. What I said—and I repeat it—was that I believe that a contract made between the employer and the employee is all that is necessary. They both agree that, in order to get the efficiency that they both need, they are prepared to pay for discrepancies which common sense shows are there. There is no question of fining anybody. The kind of interpretation which the noble Lord put on it shows the bias with which he approaches this question: that the employee can never be wrong but that there are dirty employers who always want to be wrong. That is the wrong attitude here and the noble Lord reflects it far too often. But he must not reflect it by misinterpreting my words.
Lord Stoddart of Swindon: On the question of bias, I think that it is a case of the pot calling the kettle black. The noble Lord is very well known for his bias in many respects, and for his forthright speaking in the House of Lords, which is particularly what we want. I understood perfectly what he said about the contract of employment, but I thought I explained earlier the difficulties that a worker may very well be in when he signs that contract of employment. He is at that moment perhaps starting a job without knowing what it entails, or he may be applying for a job but before he can get it he will have to sign the contract. Therefore he is in a weak position, at that point in time, in relation to his employer. That is what I was getting at, and in those circumstances it is wrong. It militates against the interests of the employee, and in favour of the employer, if he is under that contract subject to being fined for defalcations and shortages which may not be his own fault.
The noble Lord asks: who is going to start a small business or department in those circumstances? Marks and Spencer did and they employed workers under the protection of the Truck Acts. Today, Marks and Spencer see no reason to fine their employees for shortages and what have you. The reason they do not is that they manage their business properly and ensure that there is proper control, both of cash and of stock. It is made clear to their workers that any of them who

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are found to be dishonest will no longer be welcome to be employed by Marks and Spencer.
Although the noble Lord the Minister said that condoning dishonesty by punishing collectively is better than the sack, from the point of view of the business and from the point of view of his fellow workers it is much better that a dishonest worker should be sacked. It is a protection for the employer and it is a protection for the other people who are employed. That is the way to run a business. I therefore think that the noble Lord, in suggesting and bringing up this question of dismissal, is guilty of perhaps misleading himself and by misleading himself is misleading the Committee. As I said, I do not intend to press this amendment at this stage, but I hope that the noble Lord, Lord Trefgarne, will ensure that the debate which has been a short but interesting one is well read in the department. It may well be that we shall come back to this matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 9 to 11 not moved.]
5.30 p.m.
Lord McCarthy Lord McCarthy moved Amendment No. 12:
Page 2, line 3, at end insert—
"(2A) Where an employer makes a deduction from any wages of any worker employed by him and one ground for such deduction relates to any loss or any event causing, or likely to cause, loss, to the employer, which has been, or which it is reasonable to believe has been, occasioned by the dishonest conduct of some other person without default on the worker's part, the deduction shall not exceed one-twentieth of the net amount of the wages payable to the worker on that day.
(2B) Where an employer receives a payment from a worker employed by him and one ground for the payment relates to any loss or any event causing or likely to cause loss, to the employer which has been or which it is reasonable to believe has been, occasioned by the dishonest conduct of some other person, without default on the workers part, the payment shall not exceed one-twentieth of the net amount of the wages payable to the worker on that day.").
The noble Lord said: This amendment is one more attempt to civilise the operation of Clause 1. As has been said by my noble friends on this side of the Committee, if our Amendment No. 1, or if Amendment No. 2 which was moved by the noble Lord, Lord Rochester, on the reintroduction of the reasonability test, had been passed by the Committee, all these amendments would not need to be moved. It is precisely because the Government now take power or now wish to give employers power to dismiss unreasonably and unfairly in any circumstances that we find it necessary to move these amendments. In answer to the noble Lord, Lord Harmar-Nicholls, I have to say that we are not asking for any category of new and extended rights.
It is our central submission today that the workers so far as they were covered were better off and would be better off with the 1896 Act than they will be under this Bill. We are not asking for anything that has not existed since 1896. In effect, we are not asking for the same degree of protection. We are trying to mitigate the consequences of what the Government are doing, particularly because they will not accept the retention of the fair and reasonable test. There is nothing new in what we are trying to seek.
So far we have not had any success not simply on the reasonability test but also on the small and minor points which my noble friends have sought to introduce to the Committee. What we are trying to do in this similarly minor amendment is to limit the rate of repayment to one-twentieth of the wages due on that day in circumstances in, "which it is reasonable to believe",
that the deduction,
"has been occasioned by the dishonest conduct of some other person without default on the worker's part".
In other words, this amendment bites only where the deduction arises as a result of somebody else's conduct and not the conduct of the worker concerned, where the employer cannot show that the worker has been dishonest or in some other way in default. In those circumstances, because noble Lords opposite would not accept any of our previous amendments where we wished to restrict the employer's rights to do these things by reference to dishonesty and so on, we are asking them to accept some small reduction on the rate of return.
There are many reasons one could give why this is a modest thing to ask. But I would suggest that the Government themselves accept the principle behind this amendment because the Government propose in Clause 2 in particular that where workers sell directly to the public or to fellow workers or to other individuals in their personal capacities, there shall be a limit of one-tenth—that is what Clause 2(1) says—and that the rate of repayment,
"shall not exceed one-tenth of the gross amount of the wages payable to the worker on that day",
whether it is his fault or not. We say that if in those circumstances the Government are prepared to accept a limit of one-tenth, surely in the rather more general circumstances of this clause they would be prepared to accept the limit of one-twentieth. I beg to move.
Lord Trefgarne: Under the Bill as it stands a worker can be made to compensate the employer for a loss or shortage only if the worker has a contractual responsibility for the loss or shortage (for example, his contract makes clear that he can be asked to compensate the employer for that loss or shortage). This is clear law and it is reasonable that the parties should agree their own rules in the contract and stick to them. It is quite reasonable that where a worker has accepted a contractual responsibility for losses, or for the cash that is the lifeline of the business, he should meet such losses or shortages.
We have considered this amendment very carefully but have concluded that it would lead to uncertainty and complexity. The amendment would require the employer to seek to determine responsibility in fact for losses and shortages rather than simply agreeing with the worker to make a deduction and drawing a line under the matter. This might make the employer, faced with continuing unexplained shortages that he had to meet as he could not prove dishonesty, more likely simply to dismiss the worker concerned. The amendment would lead to complex and lengthy tribunal cases investigating who was in fact responsible for particular losses or shortages.
The 10 per cent. limit on deductions on account of cash shortages or stock deficiencies is a response to

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what emerged as a particular problem area in the consultation exercises conducted in 1983 and 1984. We consulted on the 10 per cent. figure, which proved acceptable. There is no evidence of any more general problem and no reason for the 5 per cent. limit proposed in this amendment. Even if the principle that workers could not be asked to accept a contractual responsibility unconstrained by various statutory controls on the behaviour of the employer were accepted, these particular controls seem to have no great merit. Why a 5 per cent. limit on wages when someone else is responsible for the loss? I think it would be wisest just to leave matters to the parties as is proposed in the Bill.
Lord McCarthy: The noble Lord really is amazing. If he wants to say that he should like our amendment to propose one-fifth rather than one-twentieth, of course we will do that; but otherwise what he says is quite irrelevant. We say one-twentieth because we are trying to be reasonable. It is not an argument against our reasonability for the noble Lord to say that we should have been unreasonable or less reasonable.
Then he says that he thinks there are circumstances in which when stoppages occur as a result of cash loss or stock loss one-tenth is a reasonable figure; but where deductions arise not from cash or stock but from some other cause no figure at all is reasonable. What possible argument can there be for that? I expect the noble Lord to make the arguments about uncertainty. I expect him to tell me that otherwise employers will not be able to employ people. I think it is time he set that to music.
Amendment, by leave, withdrawn.
[Amendments Nos. 13 and 14 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 15:
Page 2, line 14, after ("more") insert ("express").
The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendment No. 16 as both amendments refer to the same point.
We are now, as my noble friends and I see it, faced with a Bill where every part of the dice is loaded against the worker, at any rate against the worker who does not have strong union organisation. The point has not yet been made, but what spin-off effects this Bill will have in those areas where the union is organised among workers involved has yet to be investigated. No doubt at some point the Government will tell us what they expect there.
These are the circumstances of the vulnerable and isolated worker. He is now to be bound by contract or by a written document signifying his assent, with a certain number of uncertainties. We hope the Government will say there is at least a document that he has signed. We then come to what is meant by his contract—the "relevant provision" in subsection (3). The terms which are within the relevant provisions are either express or implied. If the Government are concerned about certainty and uncertainty, such a phrase in a statute of this kind is a recipe for disaster. The Government must take the responsibility that it is not just a disaster in the abstract but a disaster for the
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worker because it will always operate against him on the structure that we now have.
Lawyers know very well, and laymen know even better if they have been involved in litigation (and many laymen know as well as lawyers) that terms implied into contracts by tribunals or the courts, and especially appellate courts, are often very difficult to predict. There are terms implied in fact; there are terms implied in law; there are terms implied because of that well-known test, "An officious bystander would think that the parties intended to include them although they did not include them". There are terms implied to give what the court thinks is, in the old phrase, "business efficacy" to the contract; there are terms implied by some judges because, especially today, they think it is reasonable for them to be implied.
The Government, who eschewed "reasonableness" on our Amendment No. 1, specifically include implied terms and bring in reasonableness in litigation by another door. There are terms implied because of a custom or usage of the trade; and there are terms implied by other judges because they see them as part of the relationship between the parties and not coming under any of the other heads. Those broad categories only begin to elucidate the complexities of the implied terms.
Implied terms are nearly always the cause of controversy. For example, in 1931 the Court of Appeal implied a term allowing an employer in Lancashire to deduct for bad workmanship because, the court said, that was a normal part of Lancashire cotton weaving. One of the Lord Justices came from the area. He believed that, even if the workers had never heard of it, that had to be implied into the contract.
Many Members of the Committee will have seen, a little outside the area, the decision on 30th May this year about what is implied in the contract of a teacher. That was a matter of great dispute between the parties. The learned judge in the High Court held that the contract of employment in a professional capacity would not normally be expected to detail all the obligations but that it must include whatever could be seen as a professional obligation, though not referred to. He thought that meant the standards set both by the profession and by public expectation. I appreciate that is not about deductions but it gives some illustration of the kind of controversy and complexity which always surrounds implied terms if an argument breaks out between the parties. Whether those decisions are right or wrong does not matter, but they illustrate the uncertainty.
Why let lawyers litigate when—and the Government say this is what they want—there should be clarity in the contractual arrangement? Why have the matter brought to implied terms? Indeed, the matter is to be put into writing in one way or another; In subsection (3)(a) and (b) one would expect something in writing if only because (and this was an amendment that we did not move but which referred to the issue that most employees have written particulars of their employment) one would hope to find a reference there. So why the insistence that we must have implied terms to deal only with the situation of an oral agreement? That would seem very undesirable.
Consent under Clause 1(1)(b) must be in writing. Why should we not have similar clarity in the Bill, even on the basis of the Government's logic and not on the basis of any of the arguments we have hitherto advanced? Surely the Government will consider again whether implied terms should be kept out and that clarity between the parties must at least make the deduction clause an express term of the contract—that refers to the first amendment—and leave out reference to implied terms because that will only increase uncertainty and establish an area for new controversy which would not otherwise be there. I beg to move.
5.45 p.m.
Lord Rochester: I should like a little more clarification from the noble Lord, Lord Wedderburn, because I do not altogether understand the significance which is attached in this amendment to the distinction between an express and an implied term of contract; and I must admit to being something of a layman in these matters. If, for example, there is a collective agreement which sets out, say, a disciplinary procedure, that could lead to pay being withheld and that would surely be recognised (would it not?) by any court or tribunal as a valid implied term of the employee's contract.
Moreover, as I understand the Bill, it protects employees against arbitrary wage deductions based on implied terms because the employer has to tell the employee that such a term exists and give him a written explanation of what it means before making any deduction. The employee also has the fallback remedy to which I suppose we shall come later. If he believes there is no implied term in his contract he can complain to an industrial tribunal, which will decide whether there is such a term.
It may be that I have misunderstood what the noble Lord has in mind or that there is much more to it than what I have seen, but I felt that I should give expression to that doubt.
Lord Denning: I am afraid I do not support the amendment. When speaking about terms of a contract we in the law know perfectly well that they can be express or implied, or they can be oral or in writing; and we always manage to deal with them quite well. In the old days we had requirements for the terms to be in writing, but we have lost all that and we can have them quite generally, as the words are in the Bill. Therefore I do not support the amendment.
Lord Trefgarne: Having listened to the noble and learned Lord, I am not sure there is any more I need say; but perhaps I should explain that under the Bill as drafted the employer will have to give the worker a copy or a written explanation of any terms authorising a deduction from wages prior to the making of a deduction authorised by them. The important objective is to ensure that the worker knows of the terms before any deduction is made on account of them.
Taken with Clause 1(4), which deals with retrospective amendments of the contract, these are strong controls. Proposals to strengthen these controls must be balanced against the added complexity for the employer, and the danger of creating a situation where
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he can easily trip over a technicality. The amendment would rule out implied terms of contracts from being terms which could authorise a deduction.
The amendment seeks to bar the implied terms of contracts from being terms which, as I say, could authorise a deduction. I understand that it is common for terms of contracts to be implied from collective agreements with trade unions, custom and practice in the industry, or company rule books. A relevant example would be a term implied from a company disciplinary procedure which might itself be part of a collective agreement. There seems to be the thought behind the amendment that there is something undesirable about implied terms. That is not the case; but in any event, since the Bill makes it clear that the worker must be given a written explanation of the implied term, he will not remain in ignorance of the term simply because it is implied. I hope that in the light of this explanation the noble Lord will not wish to press the amendment.
Lord Wedderburn of Charlton: If I do not press the amendment, I shall certainly press the argument, and it is a matter to which we may come back on Report because, with great respect, a number of fallacious concepts seem to be floating about in the Committee. It is perhaps the hour of the day. For example, there is a distinction made between terms which are implied in a contract and terms which are incorporated into a contract by reference.
So far as concerns collective agreements, the normal position is that the statement of written particulars of the employee will refer to the collective agreement, and that is not an implied term. I know of no authority to say that that is an implied term. It is a term incorporated by reference. If the two categories alone are permitted, it is more in the camp of "express" than anything like that of "implied". A company disciplinary procedure incorporated by written particulars or other document or express reference by the contract of employment is of course incorporated.
It is true that on occasion when an employer does not get his written particulars right, or when he is slovenly about the document which he is obliged under Section 1 of the Employment Protection (Consolidation) Act to give to each employee, the courts sometimes have to bend their minds to implying other documents—be they collective agreements or works rules—when it comes to the contract of employment, and they have frequently done so to the disadvantage of employees in the last decade.
It is exactly that fact to which my noble friends and I object. We object to the fact that the worker will not have the certainty of finding it in his written particulars or other document, be it under this Bill or under the Employment Protection (Consolidation) Act, and there will plainly be a great deal of overlapping of pieces of paper in that respect to which no attention appears to have been given. He is entitled to the certainty of something written down which will attract his attention. But if one is saying that we can use the implied term where the employer has been slovenly in his practice, and where he cannot even be bothered to give to the employee the proper written particulars to refer him to the documents where the deduction clause

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may be found and that that is where the implied term will be used, of course it will. That is precisely the matter to which we object in this amendment.
I say with great respect to the noble and learned Lord that the idea that just because most statutes and most judgments use the phrase,
"terms of a contract express or implied, oral or in writing",
then we have to use it here seems to me not to follow at all. Indeed, the implied term has expanded its scope in the contract of employment in the last 10 years—it is common knowledge—to the disadvantage of workers. In cases such as the notorious Hollister decision the courts have expanded the implied term "to co-operate" on the workers' side in such a way that, despite one or two judgments putting obligations on employers, managerial prerogative has been expanded in business reorganisation in the common law to a very large extent.
If the noble Lord, Lord Trefgarne, says that it will be all right because the worker will have something written down and he must know of it under this Bill, what is the point of the implied term?—because then presumably this will be covered by the Bill without the implied term and a written explanation will be enough.
I confidently expect that when we look at Hansard it will be found that there is something in the point that implied terms will operate exactly as I have outlined, when this Bill even on its own premises, should not encourage the practice of bad management. That is a situation where management has not given to workers in advance the documentary evidence of their obligations to which they are entitled. It is precisely there that the implied term will be used and, on the structure of the Bill, must be used. We ought to look again at the matter when we see the nature of our debate today. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 16 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 18:
Page 2, line 19, after ("contract") insert ("or any such provisions").
The noble Lord said: I wonder whether I may put this amendment very briefly to the noble Lord the Minister because I think that perhaps there is no difference of principle, especially in the light of a phrase that he used when speaking on the last amendment. I am moving Amendment No. 18 and for convenience I shall speak also to Amendments Nos. 19 and 20.
The point can be put simply. The noble Lord the Minister, as I understood him, remarked that the Bill prevented certain types of retrospective deduction. It is fairly obvious that on anybody's premises retrospective deduction is not really a very good idea. However, as I understand it, subsection (4) allows for the prohibition of variations of the contract under Clause l(l)(a) and all types of written consent under Clause 1(1)(b), but that does not cover the case of a contract which itself permitted retrospection.
I should like to give an example. Let us suppose that a young man helps out on Saturdays in a computer shop; and any Members of the Committee who have had any contacts with computer shops will know that the best time to go to these places is on a Saturday when the teenagers are there, because they know all about computers. So the young man helps out from time to time and then he is taken on as a part-time employee. Let us suppose that there is a contract in that clause which allows for deductions for any losses which occur in any period during which he has worked there. That would not be a variation. It is an original contract, and as I understand it it will not be covered by Clause 1(4). It is a contract which provides for the possibility of retrospective deduction without variation and of course does not come under the heading of the written consent.
I have other examples, but I shall leave it at that. In the hope that the Minister will say that he will take this amendment away and look again at Clause 1 (4) I beg to move.
Lord Trefgarne: Clause 1(4) prevents employers from varying the contract or obtaining the consent of the worker to the making of a deduction in respect of a particular event and then deducting in respect of an earlier event. For example, it would be unlawful for an employer to vary the contract or obtain consent to his making deductions for lateness, and then to institute deductions for incidents of lateness that had occurred some months previously.
I must assure the Committee that Amendments Nos. 18 and 20 are of no effect, but that Amendment No. 18 amends the reference to relevant provisions in Clause 1(4) to cover all provisions of a contract, and since deductions can be authorised only by relevant provisions as defined in Clause 1(3), this is of no effect. Amendment No. 20 simply says that deductions or receipts covered by the subsection are unlawful, which is already the case. Amendment No. 19 would have the effect that an employer could not enter into a contract with the worker and then make a deduction from his wages on account of a matter that occurred before the contract was entered into.
I wonder how real is the problem that the amendment seeks to deal with. If an employer agrees to take on a worker for the first time, what event might there be that happened before the contract was forged in respect of which the employer might want to make deductions? It cannot be anything to do with the employment relationship, as there was no employment relationship.
The amendment might have some unfortunate side-effects. It would debar an employer from reaching an agreement to take on a worker, subject to the worker agreeing to have deductions from his wages in respect of something that had already happened before the employment commenced; for example, the individual had borrowed money from the employer before he worked for him or had run up a debt with him as a customer of his business.
The problem that the clause deals with is where the employer agrees terms, seeks to vary them and then makes a retrospective deduction in respect of an event related to the employment relationship that occurred

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before the variation. This is rather different from employer and worker agreeing terms at the outset of employment that incude provisions for deductions in respect of past events when the worker was not employed but was perhaps a customer. I think that the amendment adds little by way of extra protection, at a possible cost of some unintended side-effects, and I hope that the noble Lord will not wish to press it.
6 p.m.
Lord Wedderburn of Charlton: One of the problems with these amendments and with the noble Lord's response is that many of them relate to apparently small points, but they are real ones. Each one, it is argued, will either be all right in practice or will have no effect.
If I may illustrate, the Minister by advancing up the flanks, as it were, has forsaken his mid-field. He says that there must be the possibility in a contract to allow for the recovery of money borrowed from the employer or debts incurred previously by way of business; so the principle of retrospection is not to be absolute. I can see some force in that. One might wish to take account of that, but the Minister will not allow variations for that. Why not? The provision does not allow variations for money borrowed, debts run up in business, and so on, previously. On the Minister's logic he ought to allow variations for that.
I merely take two points. Secondly, the Minister asks how real all this is. It is very real. The example that I gave was a simple one of a youngster working in a shop, just helping out and then being taken on. But we are dealing especially with the part-time employee, the short-term contract, the casual contract and all the other forms of a typical and marginal employment which are now being analysed by the academics but which are not doing a great deal of good for some of the workers, compared to their need for full-time and secure employment. We rarely get the numbers broken down into the jobs that are part time and insecure.
The point about short-term or casual contracts is that there may well be a short-term contract for a few days and then for a week or two. Those would be broken up and they would be separate contracts. They would not fall under the ban of variation. They are not variations one of another; they are short-term and separate contracts, except that in some such cases the courts—and this is an area of complete confusion in case law—imply what they call a global contract to cover the relationship. But in the majority of such cases there are fragmented, short-term relationships for such workers; fishermen, for example. There have been cases recently where people have been held to have only short-term contracts, interspersed with periods away.
I take the Minister's point that different types of debt may well be considered separately. But no kind of retrospection is to be forbidden there. It is not within the Government's logic to permit restrospection there, for all types of debt anyway, and to ban it for variation. I ask the Minister whether he will say that he will look at that again. In practical terms that could be an important point. We all know that deductions are often made in respect of stock losses—perhaps a little
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less so for cash shortages—which take some time to come to light. Periods of time matter in the relationship between the parties. In asking leave to withdraw the amendment, I hope that the noble Lord will consider carefully what result subsection (4) as it stands will have.
Lord Trefgarne: Before the noble Lord seeks permission to withdraw the amendment, he has asked me specifically whether we will look at the matter again. I am bound to say that I cannot see much scope for that. However, I wish to be as constructive as 1 can be. I think that he is asking us to look at the possibility of distinguishing among different kinds of debt, where some would be deducted retrospectively and others would not. I believe that that presents considerable difficulties of definition. Nonetheless I shall ask for the matter to be looked at, but, to be frank, not with much expectation of success.
Amendment, by leave, withdrawn.
[Amendments Nos. 19 to 21 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 22:
Page 3, line 12, after ("person") insert ("(not being a person employed by, or directly or indirectly under the control of. the employer)").
The noble Lord said: This amendment is concerned with Clause 1(5)(d), which is already known by those who know the Bill—and they are few so far but there will be more—as the check-off clause. It takes out of all the controls of this part of the Bill certain deductions made in accordance with its terms, with the agreement of the worker, which are to be deducted and paid over to a third person.
Many people concerned with employment matters will immediately think of the check-off; that is to say, the arrangement whereby the employer deducts a portion of wages due to the worker who is a union member and pays it over to the trade union. It is an arrangement which in terms of stability and good industrial relations has an important place in a number of industries and indeed now in a number of services and in the public sector.
Clause 1(5), however, goes rather further. It relieves the employer of the prohibition on deductions in subsection (1) so that he is relatively free, although it then reimposes the requirement for consent. As it stands, this provision in the clause relieves the employer of the requirement to gain consent, whatever the relationship of the third party to him. It does not seem to us that that can be right.
Some aspects of the Truck Acts originated in the "tommy shop" system. I am not suggesting that that would necessarily be re-created; that is, shops under the control of the employer. But would it not be desirable, as a condition of exempting the employer from the normal controls of subsection (1) and imposing merely the requirements of consent in subsection (5)(d), to insist that the third person should be independent of the employer; or should there not be some other formulation which prevented any kind of abuse in that respect? I put the point shortly, and I beg to move.
Lord Trefgarne: I understand that it is common for workers to agree that the employer can deduct sums and pay them to third parties—for example, to a trade union, a charity or a social club—with the third party telling the employer how much to deduct; for example, what subscription is due. The most common example is the check-off of trade union subscriptions, the worker signing an agreement that the employer pays directly to the union subscriptions of an amount notified by the union. Such arrangements are perfectly proper, but it would be wrong, I think, if the employer was guilty of an unlawful deduction if the union got its calculations wrong.
The amendment is clearly designed to protect the worker where the third party is employed by or controlled by the employer. The thought is, I think, that the employer could possibly instruct the third party to advise him to deduct a larger sum than was properly due, part of which was then paid back to the employer.
I believe that the worker is already well protected. Deductions on account of those arrangements are still covered by Clause 1, if the worker has not signed his agreement to the arrangement. The protection of the worker against the abuse of that provision is that he can always withdraw his agreement. I recognise the concern that lies behind this amendment, but I think that it is unnecessary because the worker is well protected even without it.
Lord Wedderburn of Charlton: I hear what the noble Lord the Minister says. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Baroness Cox): I must point out that if Amendment No. 23 is agreed to I shall be unable to call Amendments Nos. 24 and 25.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 23:
Page 3, line 16, leave out from beginning to ("or") in line 22.
The noble Lord said: I think that it will be convenient if I refer also to Amendments Nos. 24 and 25. They are all related to clause l(5)(e)—deductions made from workers' wages where the employee has taken part in a strike or other industrial action.
There are three major points which support the amendments to which I am speaking and moving. First, the paragraph relieves the employer of the prohibition upon deduction in Clause 1. The first thought that comes to mind is, why? Should there be no control just because there is a strike or industrial action? One might suggest that the employer should say in advance what he will do if he intends to deduct sums for industrial action, at any rate in general terms. That might lead to a document as to his policy on the matter. However, that is not required. He is left at large.
Secondly, as has been said in another place, it appears to be one of the Government's reasons for having the clause, that in effect it gives the employer the right in law without constraint to fine anyone who dares to take industrial action. What he can do will
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depend upon the state of industrial relations, trade union strength and the labour market. The Government may then say that one of the reasons for the provision is to keep strikes and industrial action away from industrial tribunals. If the deductions and fines for industrial action were covered by this Part of the Bill, complaints could be made to industrial tribunals. It has long been a policy of employment protection legislation that the controversial issue of what is a just or defensible industrial action, lock-out or strike should be kept out of industrial tribunals.
Of course, this is the Government which invented the procedure of joinder—that the trade union can be joined in an unfair dismissal action in an industrial tribunal if it threatened to take industrial action which induced the dismissal. With those provisions, the Government pushed the justice and equity of strike action into the tribunals.
It has been said in another place that the Government are relying upon the traditional argument—keep strikes out of the industrial tribunals. If that is so, the jurisdiction under the present law of unfair dismissal with regard to industrial action and strikes (the jurisdiction of the industrial tribunal) is destroyed under Section 62 of the 1978 Act in effect only where the employer treats all employees alike—that is to say, where he does not victimise one or some by dismissing them or refusing to re-engage them as against the others who were involved in the same industrial action or, under the amendments, the same industrial action at that establishment.
As it stands, the Bill allows for discriminatory fines and deductions and so it is not in line with traditional policy. Amendment No. 25 is a probing amendment to ask why that should not be included. If one is to impose the traditional policy of keeping industrial tribunals out of strike issues, why do the Government not do it in the way that is traditional—by saying that can be the case where the employer treats all his workers alike?
In other words, the clause takes a bit of the old policy and adds a bit of its own. To keep out the industrial tribunals, it excludes fines for strike action from the controls and any obligation to say in advance what the employer's policy will be with regard to that matter. I should have thought that was an arguable point on any basis. Having done that, and used the traditional policy for that, the provision does not go on to tell the employer that he will be at risk if he victimises some people as against others.
Our amendments ask the question: why not? If the logic of the parallel with Section 62 of the 1978 Act is to be followed, surely some equity must be imposed as a price for the lifting of all the controls. There is nothing here about workers' consent. I know what the Government will say about that. They will plainly say that where a strike and industrial action are concerned the workers' consent is irrelevant.
I should have thought that two other points would have caused the Government to look with care at the clause—first, the requirement that the employer should in some circumstances say something about his policy in writing and, secondly, the determination that if the matter is to be taken from industrial tribunals by removing it from the clause, the price should surely be

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that there is no unfair discrimination and victimisation merely because people have taken industrial action, which, in some countries and sometimes in this country, people like to refer to as the right to withdraw their labour.
At present far more than anything we have so far met in the Bill, the clause not only permits but positively encourages management victimisation by way of fines and deductions of those who take part in industrial action. I know that it will be said that such people may be lucky to have their jobs back. That is the stage we have reached. We cannot accept that that is a proper piece of legislation to pass now. I do not think that it is a piece of legislation that will be found in that form in any other Western European country. In the light of these amendments, we ask the Government to look at the matter again. I beg to move.
6.15 p.m.
Lord Trefgarne: Perhaps I may just swiftly explain the objective of Clause 1(5)(e). If a worker is involved in industrial action—for example, in a go-slow or other similar action in which the worker stays at work but deliberately hampers production—the employer is often entitled to deduct something from his wages. There may be an express term in the contract that allows for that, but more often there will be an implied term in the contract that the worker does not behave in that way and that, if he does, the employer is not obliged to pay him his wages in full.
The worker can of course go to the civil court and argue that the employer is in breach of the contract in making such a deduction. There are a number of cases where a worker has taken an employer to court and, in some instances, the courts have disagreed with the employer's interpretation of the implied term of the contract and have made an award to the worker.
Clause 1(5)(e) leaves the existing legal situation in respect of deductions on account of the worker having taken part in industrial action broadly unchanged, Clause 1 will not apply to such deductions, so the worker's redress if he believes that the deduction is not contractually authorised is to the civil court for breach of contract rather than to an industrial tribunal. In the Government's view, it is best that contentious and difficult problems concerning deductions in disputes, where emotions may run high, remain matters for courts and not for industrial tribunals. The courts—not tribunals—are best placed to deal with such matters. Each of these amendments changes that situation. Amendment No. 23 reverses it entirely. Amendment No. 24 effectively does the same thing as a tribunal could be asked to decide if a deduction was authorised by the worker's contract. Amendment No. 25 has the effect that a tribunal could be asked to consider whether the employer had treated all workers on strike equally. It is arguable, I believe, either way, whether the employer should be prevented from being selective and from deciding to forgo his right to make deductions from some workers, although our fundamental objection to the amendment remains that these issues are best not put to tribunals at all. I believe that Clause l(5)(e) is essential and that each of these amendments destroys it or erodes it significantly.
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The noble Lord, Lord Wedderburn, was concerned to know why we should exclude deductions for strikes and industrial action. The answer is that it is partly because, as the noble Lord himself said, the scope of implied terms is often uncertain, and particularly so, I fear, in this field. The employer would have real difficulty knowing what the implied term was and would therefore be debarred from making any deduction by the technical requirement of Clause 1 (3)(b) to explain the effect of the term in writing to the worker. I hope that these difficulties will have persuaded the noble Lord that he should not press the amendment.
Lord Wedderburn of Charlton: I am nearly encouraged to press it, especially when the Minister, to whom I am grateful, says that deductions can be made in the case of a go-slow because it will be a term, and often an implied term, of the contract that employers are allowed to do so. As seen in the recent teachers' case, this may be difficult to interpret. But the noble Lord goes on to say that implied terms arc very difficult and that this explains why the Government have excluded the area of strikes and industrial action from the scope of Clause 1. To exclude the problems of implied terms from Clause 1 and to leave the matter to common law where one finds implied terms that are very difficult to interpret seems a curious policy to follow. The Government wish of course the employer to be in the clear, so far as this is possible, in respect of fines for industrial action. That is what they wanted; that is what they have done. It is that approach that these amendments were meant to challenge. 1 beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
[Amendments Nos. 24 to 26 not moved.]
On Question, Whether Clause 1 shall stand part of the Bill?
Lord McCarthy: The Committee will not be surprised to find that we wish to oppose the Motion that the clause stand part of the Bill. I wish to say a few words about what the clause does, what the Government have said and done this afternoon and what the consequences, we believe, will be. This clause is to replace the provisions of the 20 or so Acts dealing with deductions and payments by workers with two broad tests: what is allowed and provided by the statute, and what is contained or implied in the contract. We have sought in various ways to argue that this is insufficient. We have sought to argue that it is an imperfect form of protection, in particular in relation to Section 1 of the Truck Act 1896 and most especially in relation to that part of the 1896 Act that has been represented this afternoon as the reasonability test.
As a result, we have tried to put down 10 effective—nine of them very minor—gateways, into reasonability. We tried to get the Committee to reintroduce the reasonability test. The noble Lord, Lord Rochester, tried to get the Committee, if not to introduce it by statute, to put it in the code of practice. We tried to get the Committee to limit the authorisation of deductions to those that were contractual only. We tried in Amendment No. 5 to say that consent must be by the employer. We tried in Amendment No.8 to confine a deduction to

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dishonesty and default of conduct on the part of the worker. We tried in Amendment No. 10 to limit the rates of reduction. We tried in Amendment No. 15 to insist on express intent. We tried in Amendment No. 18 to limit retrospection and, in Amendment No. 22, to have a limit on what can count as a lawful third party. Finally, my noble friend Lord Wedderburn tried to limit deductions in cases of strikes in Amendment No. 23.
What have been the Government's answers? I must be fair. Apart from the one, or perhaps one and a bit, that the noble Lord undertook to take away, to our 10 reasonable but minor ways into reasonability we have had five defences. The noble Lord has said that the amendments, or parts of the amendments, were declaratory of the Bill and therefore not necessary anyway. The noble Lord has said that even if they were not declaratory of the Bill, they would have no effect and were not required. Thirdly, he has said that they might have some effect but that they would also, unfortunately have side effects and that such side-effects could not possibly be tolerated.
The noble Lord has said repeatedly that the amendment would foster uncertainty. Here, we have had some advance on previous statements by the Government. I congratulate the Minister. Previously, and particularly in respect of the reasons for the Government taking out the reasonability test, we had no explanation at all. The Secretary of State on Second Reading—I had intended to read out his remarks but I shall not now do so—did not really refer to the reasonability test specifically at all. He talked about the chaos and the archaic nature of the present Truck Acts, as indeed did the Minister in another place. What they are really talking about is the difficulty of doing something about restrictions on deductions by check. That may be chaotic. We are talking about stoppages. We are talking about deductions.
For the first time, we have had some kind of defence in terms of uncertainty. We have been told about the position of the employer who would be uncertain if any of our amendments were accepted. And finally of course we have had our old friend, the employment effect. Employers would not like it. If these things were done, employers might not employ people, might employ fewer people or might dismiss people. Here, the Government ease into an area where there are a few facts. That is something that the Government do not like to do. Several surveys have been done including those by the Institute of Policy Studies and the Government's own study, Burdens on Business. These suggest overwhelmingly that when businessmen, even small businessmen are asked what it is that limits employment, their reasons—in so far as they give reasons—have nothing whatever to do with the Truck Acts. They are to do with VAT, with taxation and with all kinds of complex forms that come from the Department of Trade. Very few, if any, talk about Section 1 of the Truck Act 1896.
Nevertheless, the Minister says that there will be an employment effect. It is not only we, on this side, who say that there is no justification for this clause or indeed for Part 1 of the Bill. Evidence has been submitted, following upon the consultative document,
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by the National Association of Citizens Advice Bureaux, by the law centres, by the CBI and by the Institute of Personnel Management. The general thrust of this evidence is that there is no justification for this part of the Bill. There may be some justification for the chaos of check restrictions. But there has been no substantial evidence against Section 1 of the Truck Act 1896. We have therefore to ask the Committee to oppose this clause. We do not say that, in destroying the unfair and unreasonable provisions of the 1896 Act, that the Government want to be unfair and unreasonable. We do not say that the Government believe that the result will be that employers will be unfair and unreasonable. We say that, in the interests of their ideology and their friends, they do not care whether or not they are unfair or unreasonable.
6.30 p.m.
Baroness Turner of Camden: I rise to support my noble friend who is moving that this clause shall not stand part of the Bill.
As with the Shops Bill, we are discussing a situation which applies to employees who are in a particularly vulnerable situation. The Victorians believed that such people had to be protected. I remind Members of the Committee opposite that Disraeli played some part in that, because a long time ago, when I was at school, I remember reading his book, Sybil—the Story of Two Nations. I can still remember the description of the "tommy shops" and the operation of the "tommy shops" which eventually led to the Truck Acts legislation.
There was an acceptance then, and there should be now, that there was a parliamentary obligation to protect those who are most vulnerable. I believe that it is partly because the Government have not recently been seen to discharge that duty that the Shops Bill ultimately failed to pass, and that the Government were defeated in Committee in your Lordships' House last night on some key sections of the Social Security Bill.
I believe it was claimed by the Minister in another place that the new provisions on deductions represent a step forward for vulnerable employees. It does not appear to us on these Benches to be so. It is true that it abolishes the distinctions between workers. The Truck Acts were limited in their cover to manual workers and I know from my own experience as an official for a white-collar union that they did not apply to white-collar employees. Nevertheless, the mere fact that the Truck Acts were there inhibited employers when it came to making deductions, even as far as white-collar employees were concerned. There is no requirement now because we failed to get the amendment that any deductions had to be fair and reasonable past your Lordships' Committee. That of course was a key element in the older legislation.
There have been a number of cases recently which have been referred to in the Committee, and I do not want to go over that. However, I want to remind noble Lords that many of the people who operate as cashiers at petrol stations—and their cases have been referred to—are often from ethnic minorities with, in many cases, a very inadequate grasp of English. To suggest

209
that these employees, who no doubt are often happy to have any sort of job at all, are capable of negotiating a contract about deductions and understanding what it means, is quite frankly absurd. Moreover, because of the transitory nature of much of this work, which has already been referred to in the debate, and the relative isolation of the people who do it, they are not particularly easy to organise into unions.
In such circumstances, if they cannot protect themselves, it is up to Parliament to do so. Just how necessary this protection is can be gleaned from some of the reports produced by some law centres. Fortunately, some employees who felt themselves to be victimised have been able to have recourse to such centres and law centres have been able to assist them in a number of cases. I should like to quote from a recent report by the Hounslow Law Centre, which has been doing a great deal of work in this area. It says:
"Till shortages can occur in many ways: customers can be dishonest; cheques bounce; meters are faulty or are misread; tired cashiers made to work without the breaks to which they are entitled may give too much change. In our experience management is rarely concerned to trace the error or give advice about preventing recurrences. It is much easier to make a cashier pay. The result is that cashiers' already low wages are regularly reduced below the poverty line as a result of events which are not their fault".
The Hounslow Law Centre says that in the past year it has dealt with 35 inquiries about deductions, 26 of which were from petrol station cashiers. It says that it has been successful in a number of cases.
Of course, with the absence of Truck Acts protection and with the absence of the fair and reasonable amendment which we tried to insert in the Bill before the Committee, these people will not have that protection in the future. If it is claimed that the law is difficult to enforce, all I can say is that we ought to do something about the inspectorate. We ought to have more inspectors in order to ensure that that law can be enforced for the benefit of a very vulnerable workforce. I support my noble friend's Motion that the clause shall not stand part of the Bill.
Lord Trefgarne: I am not sure whether the noble Lord, Lord Rochester, wishes to speak?
Lord Rochester: I thank the noble Lord for giving way. I feel obliged to say that, in the light of the discussion which took place over the first amendment relating to the need, as I saw it, for deductions from wages to be fair and reasonable, and in order to be consistent I must oppose the question that this clause shall stand part of the Bill even though, as the Committee will have seen, I have reservations about a number of amendments tabled thereafter.
Lord Trefgarne: Members of the Committee will not be surprised to hear that I very much hope this clause will remain part of the Bill. The clause of course provides a new and uniform protection for all workers, manual and non-manual, against arbitrary deductions from their wages. Deductions from wages will be lawful where they are provided for in the contract of employment, where the worker agrees to them in writing or where they are authorised by statute. This leaves it to the parties themselves to decide the circumstances in which deductions should be allowed, enabling the parties themselves to sort out provisions
210
that are clear, easy to understand and mutually acceptable.
I believe that this is a fair and workable system. For manual workers the new protection replaces out-dated protections which were uncertain in their application, confusing to understand and which applied to circumstances which might have prevailed in Victorian times but which are no longer relevant to modern conditions. For non-manual workers they introduce for the first time statutory safeguards against unfair deductions where previously workers have had to rely on common law remedies.
The provisions are designed to be straightforward and clear so that employees and employers know exactly where they stand. I hope that Members of the Committee will agree that this clause should remain part of the Bill.
6.37 p.m.
On Question, Whether Clause 1 shall stand part of the Bill?
Their Lordships divided: Contents, 105; Not-Contents, 83.

DIVISION NO.2

CONTENTS

Airey of Abingdon, B.

Inglewood, L.

Allerton, L.

Kaberry of Adel, L.

Ashbourne, L.

Kimball, L.

Belhaven and Stenton, L.

Kinloss, Ly.

Belstead, L.

Knollys, V.

Birdwood, L.

Lane-Fox, B.

Boyd-Carpenter, L.

Lauderdale, E.

Brabazon of Tara, L.

Layton, L.

Bridgeman, V.

Long. V.

Brookes, L.

Lucas of Chilworth, L.

Brougham and Vaux, L.

Lurgan, L.

Broxbourne, L.

Macleod of Borve, B.

Caithness, E.

Mancroft, L.

Cameron of Lochbroom, L.

Marley, L.

Campbell of Alloway, L.

Marshall of Leeds, L.

Carnegy of Lour, B.

Massereene and Ferrard, V.

Cathcart, E.

Maude of Stratford-upon-

Coleraine, L.

Avon, L.

Colwyn, L.

Merrivale, L.

Constantine of Stanmore, L.

Molson, L.

Cox, B.

Monk Bretton, L.

Davidson, V.

Monson, L.

De La Warr, E.

Montgomery of Alamein, V.

Denham, L. [Teller.]

Mottistone, L.

Denning, L.

Mowbray and Stourton, L.

Eccles, V.

Munster, E.

Elliot of Harwood, B.

Murton of Lindisfarne, L.

Elton, L.

Nelson of Stafford, L.

Faithfull, B.

Onslow, E.

Ferrers, E.

Orkney, E.

Ferrier, L.

Orr-Ewing, L.

Fortescue, E.

Pender, L.

Fraser of Kilmorack, L.

Perth, E.

Gardner of Parkes, B.

Plummer of St Marylebone,

Glanusk, L.

L.

Glenarthur, L.

Polwarth, L.

Gridley, L.

Portland, D.

Hailsham of Saint

Reay, L.

Marylebone, L.

Renwick, L.

Halsbury, E.

Rochdale, V.

Harmar-Nicholls, L.

Rodney, L.

Hives, L.

Russell of Liverpool, L.

Holderness, L.

St. Davids, V.

Hood, V.

Sandys, L.

Hooper, B.

Savile, L.

Hunter of Newington, L.

Sharples, B.

Hylton-Foster, B.

Skelmersdale, L.

211

Strathcona and Mount Royal,

Vaux of Harrowden, L.

L.

Vickers, B.

Swinfen, L.

Vinson, L.

Swinton, E. [Teller.]

Vivian, L.

Teviot, L.

Wise, L.

Thomas of Swynnerton, L.

Young, B.

Tranmire, L.

Zouche of Haryngworth, L.

Trefgarne, L.

NOT-CONTENTS

Airedale, L.

Lockwood, B.

Amherst, E.

Longford, E.

Aylestone, L.

Lovell-Davis, L.

Bacon, B.

McCarthy, L.

Birk, B.

McIntosh of Haringey, L.

Blease, L.

Mackie of Benshie, L.

Blyton, L.

McNair, L.

Brockway, L.

Mar, C.

Brooks of Tremorfa, L.

Mayhew, L.

Bruce of Donington, L.

Meston, L.

Burton of Coventry, B.

Milner of Leeds, L.

Carmichael of Kelvingrove, L.

Morton of Shuna, L.

Chitnis, L.

Murray of Epping Forest, L.

Cledwyn of Penrhos, L.

Nicol, B.

Crawshaw of Aintree, L.

Northfield, L.

David, B. [Teller.]

Oram, L.

Davies of Penrhys, L.

Parry, L.

Dean of Beswick, L.

Ponsonby of Shulbrede, L.

Denington, B.

[Teller.]

Diamond, L.

Prys-Davies, L.

Ennals, L.

Rea, L.

Ewart-Biggs, B.

Rhodes, L.

Fisher of Rednal, B.

Ritchie of Dundee, L.

Foot, L.

Rochester, L.

Gallacher, L.

Ross of Marnock, L.

Glenamara, L.

Sainsbury, L.

Graham of Edmonton, L.

Seear, B.

Grey, E.

Shepherd, L.

Hampton, L.

Simon, V.

Harris of Greenwich, L.

Stoddart of Swindon, L.

Hatch of Lusby, L.

Taylor of Blackburn, L.

Heycock, L.

Taylor of Gryfe, L.

Houghton of Sowerby, L.

Taylor of Mansfield, L.

Jeger, B.

Tordoff, L.

Jenkins of Putney, L.

Turner of Camden, B.

John-Mackie, L.

Underbill, L.

Kagan, L.

Wedderburn of Charlton, L.

Kaldor, L.

White, B.

Kilmarnock, L.

Wilson of Langside, L.

Kirkhill, L.

Wilson of Rievaulx, L.

Lawrence, L.

Winstanley, L.

Lloyd of Hampstead, L.

Young of Dartington, L.

Resolved in the affirmative, and Clause 1 agreed to accordingly.
6.46 p.m.
Clause 2 [Deductions from wages of workers in retail employment on account of cash shortages etc.]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 27:
Page 3, line 35, at beginning insert—
("( ) It shall not be lawful for the employer to make any deduction from any wages of any worker employed by him to whom this section applies on account of one or more cash shortages or stock deficiencies unless the shortage or deficiency was caused by the dishonesty, negligence default of that worker or of a worker for whom he is responsible by virtue of the express terms of his employment.").
The noble Lord said: I rise to move Amendment No. 27, and I understand that it is for the convenience of those involved if I speak also to Amendment 37. In moving to Clause 2 it might be helpful if I read from the face of the Bill. Clause 2 provides that where a worker's employment involves selling directly to the
212
public, to fellow workers, or to other individuals in their personal capacities, any deduction from his wages on account of a cash shortage or stock deficiency,
"shall not exceed one-tenth of the gross amount of the wages payable",
to him.
As background before I indicate the main thrust of my argument I wish to draw the Committee's attention to the fact that when one looks at the amendment it is clearly seen what we are not quibbling about; namely deductions in respect of dishonesty, negligence, or default of the worker, for which he is responsible by virtue of the express terms of his employment. That is in Amendment 27. What we say is why should an employee who is responsible, who is honest, who is not negligent and who is not at fault be penalised?
In another place we had some interesting observations. The Minister who introduced the Bill on 11th February said at col. 800:
"The Bill introduces an important new and modern set of rights for workers … a comprehensive, easily understood, easily enforeceable and fairer set of statutory rights concerning deductions".
Anyone who knows particularly the retail trade would object strenuously to that description.
As a matter of fact a Conservative Member, Mr. Richard Holt, had this to say at the Report stage at col. 739 of the Official Report on 14th May about the Bill and this clause:
"suggesting that [the Truck Acts] are being replaced by something superior, fairer and nicer simply does not hold water. It does not bear examination. The Government's case is wafer-thin, and water is seeping through … The Government have produced bad law on this aspect, and it will not be long before it will bring the whole Bill into disrepute".
Those are words with which I sympathise and which I accept. He happens to be a member of another party, a member of the Minister's party. The difference is that that person speaks with some experience of the retail trade. I profess at this stage to indicate a modest credential in that respect too. I am a director of a co-operative society. I have close connections with the co-operative movement, and declare an interest in the Union of Shop, Distributive and Allied Workers.
The main burden that the Minister has to satisfy is that it is right and proper that individuals not well paid, perhaps adequately paid, should bear the consequences of someone else's actions, because in the real world that is what will happen. Someone else can be careless; someone else can be dishonest; someone else can take a chance and someone else can be the victim of someone else's fraud, but the individual who is nominally in charge of the till or the cashpoint will have to carry the can. We cannot accept that that is right.
I do not believe the Minister will accept that is right either, because we are talking about business systems and the manner in which a business sets out to control its stock efficiently. Some stock control systems are good and some are bad. Some are able to control the amount of stock, to control the value of the stock, and are able to apportion and identify the responsibility so precisely that there is very little of what is known in the trade as leakage. Leakage is that amount of the stock,

213
or that amount when the cash and the stock are taken together, which is unaccountable for. In a normal well-run business an allowance is made.
Sometimes, dependent upon the nature of the business, there will be a variation. There certainly is a variation between departments, between the food department and the non-food department, even between the butchery, the milk department and the grocery department. There are understood norms. The attempt in the retailing business in 1986 is always to keep the expenses down as much as possible. That is fair. One of the expenses of a business is wastage, leakage, and one of the responsibilities of management is to make sure that that is kept down as low as possible.
In retailing in 1986 there are far more part-time employees than full-time employees. People will come on duty for two hours, or four hours or part of the day, and then go. We are talking about, as the Minister in another place said, what a nonsense it would be if every employee had his own cashpoint or till. Somebody has to be responsible but he is not responsible for the management, control and security of the cashpoint every minute of the day. The till may be left out of the control of the responsible person during lunch time, during tea break, coffee break or while that person goes to the toilet. There are a great many ways in which temporarily the person who will have to pay the shortage is not in charge of that point.
To leave this matter as it is is a charter for bad management because the bad manager says, "Although I know I should be responsible for providing training, education and making my employee far more efficient, I do not need to bother." If the employee is not diligent, honest and reliable but is careless, and there is a shortage, the Bill provides the bad manager a legal opportunity of taking 10 per cent., not once and for all but time and time again until the total amount is received. I cannot believe that that is the intention of a fair-minded government or of a fair Bill.
I believe that the stock deficiency aspect in this clause and in my amendment is part and parcel of the business risk. By and large that risk ought to be carried by the employer and not by the employee. I am talking about the honest and diligent person doing his job within the confines of the tools of the trade; that is, computerisation. In computerisation mistakes can be made. There are two kinds of losses: a real loss and a notional loss. There is a loss whereby goods are not there and a loss whereby on a piece of paper we are told that the goods are not there. When there is a reconciliation later, that is found not to be correct.
There is the transfer and the movement of the stock about a building, because each member of the staff has his own duties and the stock passes through many hands. Goods are received; they are stored on the premises; they are transferred to selling areas and placed on display. They are selected with and without the assistance of the sales staff. They are sold and they are packed. At each stage not only can those goods go missing but they can also be damaged; they can also deteriorate. Writing off losses, whether goods are sold cheaper or whether they are simply written off, are all aspects of the control of stock. In retailing in 1986 the
214
name of the game is to get the biggest volume of trade with the minimum number of employees. That means that the business wants the maximum amount of trade to be done by each employee. As I have already said, there is a great deal of coming and going.
Then there is the management. There will be shops open from 9 o'clock in the morning and increasingly to 8 o'clock or 9 o'clock at night—forgetting the Sunday nexus. Shops are open six days a week. I am tempted to deal with the Sunday trading issue, but time does not permit it. What about the manager who cannot work all those hours that the shop is open; that is, 56 or 60 hours a week? He needs his time off and somebody else is in charge of the shop. Businesses have their own ways of chastising a manager who is notdoing his job. If there is a leakage and it is shown that the manager is not as efficient as he ought to be, there are ways in which his promotion does not come along. There are ways in which, without fining him or making him responsible for the loss of stock, that manager is made to pay.
I hope that what we shall hear from the Minister is something that is helpful and fair. So far as we are concerned, a stock loss is a commercial risk which should not be passed to the employee. The employee has no means of exercising real control over stock. A true stock depends on the adequacy of management recording and monitoring systems. Stock checking systems have been proved in the past on many occasions to be inaccurate. I move the amendment and look forward to the faint possibility that the Minister may be able to say something kind about it. I beg to move.
Lord Rochester: I have some sympathy with this amendment. It seems on the face of it to offend against natural justice if the course advocated by the noble Lord, Lord Graham of Edmonton, is not followed. At an earlier stage I indicated that I think we want to reach a situation as soon as possible where there is no need for deductions from wages but we rely instead on better management practices and methods of control, as the noble Lord, Lord Graham, said.
I have a question to ask and a doubt to express, if the noble Lord, Lord Graham, would be kind enough to help me. Is there a danger that if some unscrupulous employer were denied the opportunity to effect a deduction by virtue of this suggested new subsection, he might approach the matter in an altogether different way by making use of disciplinary procedures which, more particularly in the case of employees having less than two years' service, might result in a pretty speedy dismissal? In that case, what sets out to protect the employee might, I suppose, in practice have the reverse effect.
At Second Reading, I made it plain that for my part there were a number of points in Part I of the Bill where I would wish to judge the matter on the merits of the particular case. This is one such case. I have an open mind about it. I look to the Minister for guidance and I seek reassurance from the noble Lord. Lord Graham, as to the doubt to which I have given expression.
Lord Trefgarne: These amendments would ban deductions relating to shortages except where these

215
were due to dishonesty, negligence or default of the worker himself or another worker for whom he was responsible. Under the Bill as it stands, a worker can be made to compensate the employer for a loss or shortage only if the worker has a contractual responsibility for that loss or shortage; that is, his contract makes clear that he can be asked to compensate the employer for that loss or shortage. It is reasonable that the parties should agree their own rules in the contract and stick to them.
It is also reasonable that, where a worker has accepted a contractual responsibility for losses, he should meet such losses or shortages. The amendments would require the employer to seek to determine responsibility in fact for losses and shortages rather than simply agreeing with the worker to make a deduction and drawing a line under the matter. The amendments would lead to complex and lengthy tribunal cases investigating who was, in fact, responsible for particular losses or shortages.
It should also be noted that a failure to pay a bonus due to a cash shortage or stock deficiency is treated as a deduction under Clause 2 by virtue of subsections (4) and (5). The effect of Amendment No. 27 would be to render unlawful bonus systems run by many reputable employers whereby managers get a bonus if stock shortages are kept below a certain level because such bonuses have nothing to do with dishonesty, negligence or default. Many large and reputable employers would be alarmed by that. Even if the principle that workers could not be asked to accept a contractural responsibility unconstrained by various statutory controls on the behaviour of the employee were accepted, these particular controls seem to me to have no great merit.
Why have a provision that allows deductions if the worker in question is contracturally responsible for another worker, even if the other worker has not been dishonest, but prevents them even if the worker in question has not been dishonest himself? It would be wisest simply to leave these matters to the parties. I hope that in the light of these difficulties, and, particularly, the penultimate difficulty to which I referred the noble Lord will not wish to pursue this proposition.
Lord Graham of Edmonton: It is the understatement of the night if I say that I am disappointed with the response of the Minister. He fails completely to see, in the context, very often, of very lowly paid employees, the situation of their having to be responsible for the acts of others when they are not dishonest, when they are not negligent or when they have not been at fault. I tried to explain to the Minister that in the nature of retailing there are many episodes and practices which will cause a stock loss for which a person who has been honest, careful and without fault can be held to be responsible. I simply ask this. Why should we not write on the face of the Bill a protection of that kind?
In the retail food and allied trades there are more than half a million workers. Their wage is £80 per week. Yet the Minister is saying to them that if there is stock deficiency, they should have some of their £62 or £64 a week deducted even though they have been honest and have not been negligent. There are, in
216
unlicensed places of refreshment, 116,000 workers. Their wage in 1986 is £73·26.
The Minister really reveals that he is not part of the real world. He reads his brief, he understands the Bill, he is able to argue it. But in the real world outside there are real people who will be faced—and never mind the question of equity and never mind the question of unfairness—sometimes by virtue of bad management decisions with having to pick up the tab and with being fined a few pounds through no fault of their own. I think this is a very unfair clause. I think this amendment is very reasonable and I intend to press it.
7.5 p.m.
On Question, Whether the said amendment (No. 27) shall be agreed to?
Their Lordships divided: Contents, 52; Not-Contents, 92.

DIVISION NO.3

CONTENTS

Bacon, B.

Lovell-Davis, L.

Birk, B.

McCarthy, L.

Blease, L.

McIntosh of Haringey, L.

Broadbridge, L.

Mar, C.

Brockway, L.

Milner of Leeds, L.

Brooks of Tremorfa, L.

Murray of Epping Forest, L.

Carmichael of Kelvingrove, L.

Nicol, B.

Cledwyn of Penrhos, L.

Northfield, L.

David, B. [Teller.]

O'Neill of the Maine, L.

Dean of Beswick, L.

Oram, L.

Denington, B.

Parry, L.

Ennals, L.

Ponsonby of Shulbrede, L.

Ewart-Biggs, B.

[Teller.]

Fisher of Rednal, B.

Prys-Davies, L.

Gallacher, L.

Rea, L.

Glenamara, L.

Ross of Marnock, L.

Graham of Edmonton, L.

Shepherd, L.

Heycock, L.

Stoddart of Swindon, L.

Houghton of Sowerby, L.

Taylor of Blackburn, L.

Jeger, B.

Taylor of Mansfield, L.

John-Mackie, L.

Turner of Camden, B.

Kagan, L.

Underhill, L.

Kaldor, L.

Wedderburn of Charlton, L.

Kinloss, Ly.

White. B.

Kirkhill, L.

Wilson of Rievaulx, L.

Lawrence, L.

Ypres, E.

Lockwood, B.

NOT-CONTENTS

Airey of Abingdon, B.

Eccles, V.

Alexander of Tunis, E.

Elliot of Harwood, B.

Ashbourne, L.

Faithfull, B.

Belstead, L.

Ferrers, E.

Birdwood, L.

Ferrier, L.

Boyd-Carpenter, L.

Fortescue, E.

Brabazon of Tara, L.

Gardner of Parkes, B.

Bridgeman, V.

Glanusk, L.

Brookes, L.

Glenarthur, L.

Brougham and Vaux, L.

Gridley, L.

Broxbourne, L.

Hailsham of Saint

Bruce-Gardyne, L.

Marylebone, L.

Caithness, E.

Halsbury, E.

Cameron of Lochbroom, L.

Hives, L.

Campbell of Alloway, L.

Holderness, L.

Carnegy of Lour, B.

Hooper, B.

Colwyn, L.

Hylton-Foster, B.

Constantine of Stanmore, L.

Inglewood, L.

Cox, B.

Kaberry of Adel, L.

Craigavon, V.

Kimball, L.

Davidson, V.

Knollys, V.

De La Warr, E.

Lane-Fox, B.

Denham, L. [Teller.]

Lauderdale, E.

Denning, L.

Layton, L.

217

Lindsey and Abingdon, E.

Rochdale, V.

Long. V.

Rodney, L.

Lucas of Chilworth, L.

Sanderson of Bowden, L.

Macleod of Borve, B.

Sandys, L.

Mancroft, L.

Savile, L.

Marley, L.

Shannon, E.

Marshall of Leeds, L.

Sharples, B.

Massereene and Ferrard, V.

Skelmersdale, L.

Merrivale, L.

Strathcona and Mount Royal,

Molson, L.

L.

Monk Bretton, L.

Swinfen, L.

Montgomery of Alamein, V.

Swinton, E. [Teller.]

Mottistone, L.

Teviot, L.

Mowbray and Stourton, L.

Thomas of Swynnerton, L.

Munster, E.

Tranmire, L.

Murton of Lindisfarne, L.

Trefgarne, L.

Nelson of Stafford, L.

Vaux of Harrowden, L.

Onslow, E.

Vickers, B.

Orkney, E.

Vinson, L.

Pender, L.

Vivian, L.

Plummer of St. Marylebone,

Wise, L.

L.

Young, B.

Polwarth, L.

Zouche of Haryngworth, L.

Portland, D.

Resolved in the negative, and amendment disagreed to accordingly.
7.14 p.m.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 28:
Page 3, line 36, leave out ("in retail employment").
The noble Lord said: In moving Amendment No. 28, it may be convenient if I speak to Amendments No. 31 and 38. The point can be made briefly that now we have reached this stage the Government's new dichotomy in the workforce is beginning to take shape in the Bill. That dichotomy is between those in retail employment and those who are not. There are two questions to be answered. Is it fair to have such a dichotomy? Does it work?
In one sense, the first depends on the second because obviously it is unfair to have some workers limited to a 10 per cent. deduction (to put it as a label) when others are at risk of having whatever is in the documents which count as consent under this Bill. Quite plainly, anomalies can arise between those in retail employment and those not. That is to say, the shop assistant may be in the retail sector but a stockroom assistant in the same shop might not be. One wonders whether even on the best of definitions that would be a fair situation. Why should the one not be limited to 10 per cent. deductions and the other be so limited?
The history of the definition of who is in retail employment of course began with the Bill in a very different state from what it is now. Leaving aside the minor points, in broad terms it began by a definition that said that those who carry out retail transactions directly with members of the public are to be retail employment sector employees. Of course the definition of "the public" is a well-known problem in many areas of our law. The company law prospectus issued to the public has caused a great many problems and there have to be special provisions as to what it meant by "the public".
However, the difficulties for the Government increased when they realised that here that was, in any case, an inadequate definition, however difficult, because transactions might not be with members of
218
the public but with fellow workers by those in retail employment or by other individuals—as they now put it,
"other individuals in their personal capacities".
But of course the retail transaction is not necessarily a sale: it is a supply of goods or services, including financial services.
What does this mean? Does the clerk in accounts who provides a supply of financial services to other workers in the firm, some of which are for their personal purposes, become someone in the retail sector? Is the stockroom or warehouse worker who supplies goods to other persons, who may be fellow workers within the area or without, a worker in the retail sector? Does it depend on whether the goods supplied are for their personal use? Does he have to ask? Does he have to say, "I am now supplying you with goods: are you going to use them in your personal and individual capacity or are you taking them as an agent or employee of your employer?"
I refer to garden centres as an example. I am sure many of your Lordships will have visited those. Take the garden centre which normally supplies goods or services wholesale. As I read the definition, if workers are taking goods on behalf of their employers, that would not be a retail transaction. However, suppose some members of the public come in and take goods. These definitions seem to lead to the type of uncertainty which we have seen earlier today and which the Government are beyond compare in their anxiety to avoid. Perhaps they could do better in their definition of what is retail employment and what is not if they want to avoid the core case of these amendments.
That core case—if I may repeat it briefly—is this. If some workers are to be guarded by the 10 per cent. protection and others are not, there must be a definition of the line between the two which works and is fair. Despite the changes in another place, that line neither works nor is fair, I beg to move.
Lord Sainsbury: We on these Benches support this amendment. I do not see why protection against excessive, unfair or unjustified deductions should be confined to the retail trade. I shall be very brief, because the noble Lord, Lord Wedderburn, has explained the situation so clearly. There are other examples, such as a wholesale cash and carry warehouse or a trade counter, which can also be subject to cash shortages and stock deficiencies. Therefore, as I said, we on these Benches will support the amendment if it is put to a vote.
Lord Trefgarne: As the noble Lord has explained, these amendments would have the effect of extending the protection provided by Clauses 2 and 3 to all workers and not only to those involved in retail employment. Let me clarify what we are trying to do with Clauses 2 and 3. Clause 1 provides certain basic protections against arbitrary deductions. All deductions must be authorised by statute, agreed in the contract of employment, or be with the prior written consent of the worker concerned, and the worker must have knowledge of any contractual term authorising a deduction before a deduction based on such a term is made.

219
What we are trying to achieve with the additional protection of Clauses 2 and 3 is a situation where workers do not suffer such large deductions or require-ments to make payments, on account of cash shortages or stock deficiencies, that they are left with very little or nothing in their wage packets; and it is because it is in the area of retail employment, and really only in that area, where there is evidence of abuse and public concern that we have restricted the special protection to that area. We are therefore covering sales staff, petrol station cashiers, milk roundsmen etc., but not people who are not actually engaged in sales, such as warehouse staff.
I think we would all be in agreement that practices which leave workers with almost nothing in their wage packets because they are asked to cover till shortages are undesirable. I hope we are all agreed that something needs to be done about such practices. We believe that we have struck the right balance in the protection provided here. We have included in the group to which additional protection is provided all those workers engaged in the sale or supply of both goods and services. Following amendments passed in another place, we have ensured that Clause 2 makes clear that the protections apply to all workers engaged in the sale or supply of goods to members of the public, fellow workers or other individuals in their personal activities; for example, members of a club.
We have also ensured that the person who sells not only to the public but also to companies is fully covered in respect of all his sales. The protection is also provided to those who are not involved in selling or supplying goods or services on a regular basis. This means that a worker who does not normally sell goods to the public but who, for example, covers for a colleague during a lunch break, will have the same protection as those workers who normally sell to the public. But we see no reason why protection should be extended to those engaged in activities other than selling to the public, where stock shortages might occur but where these are likely to be as a result of negligence or theft. I believe that the protection provided covers the areas of need and I hope that the Committee will resist these amendments.
Lord Wedderburn of Charlton: I thank the noble Lord the Minister for his reply. In case he said something that we would want to take into account, or there is a new point that we have missed, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 29 to 33 not moved.]
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 34:
Page 4, line 27, leave out from ("of) to end of line 30 and insert ("three months commencing with the date on which it was reasonably practicable for the employer to establish the existence of the shortage or deficiency".).
The noble Lord said: I beg to move Amendment No. 34 and, if it is for the convenience of the Committee, I think we should take with it Amendments Nos. 35 and 44. The amendment seeks to limit the period of time during which the employer
220
may seek to make deductions from an employee's wage packet in respect of a stock or cash deficiency. As the clause stands, an employer is given 12 months from the time when he established the shortage or deficiency to take action to deduct from an employee's wages, and that seems to be a quite inordinate length of time. Again, the Government seem hell-bent on favouring the employer at the expense of the employee.
A year is a long time to allow an employer to act and I am puzzled as to why this lengthy period of time was decided upon. Perhaps the noble Lord will explain the reasons. Perhaps it has something to do with annual accounting. I certainly do not know, but if it does it is quite nonsensical. Any businessman who has the slightest modicum of business and accountancy sense will check his cash and stock at frequent intervals, and in a well-run business any cash discrepancies or stock deficiencies would be spotted fairly quickly. Investigations into such discrepancies and deficiencies ought to be carried out immediately and completed in days or weeks rather than months, and our amendment limiting the period to three months is eminently reasonable in all the circumstances. It would be far more considerate of the employee's interest, too.
Why should an employee, 12 months after the event, be faced with deductions in respect of a deficiency of which he may have no knowledge? We must remember that we are dealing here not with people who are earning £20,000 or £30,000 a year, or even with people earning the national average wage of around £185 per week. We are talking about people earning around £55 to £70 per week, to whom a delayed deduction will come as a bombshell and will disrupt their already strained finances.
I do not know how many noble Lords present have experienced living a hand-to-mouth existence; some, perhaps, have. Certainly, having spent part of my childhood in the Rhondda Valley during the years of depression, I am aware of the strains and the stresses such an existence imposes on men and women and their families. It is no good the noble Lord sneering. This is exactly what happens in families on low incomes. They suffer from actions such as these, and I detest seeing the noble Lord sneering when we are talking about low-paid people such as those I have mentioned. Therefore I sincerely hope that noble Lords will have some understanding and compassion for these low-paid people and will help them in a small way by supporting this amendment. I beg to move.
The Deputy Chairman of Committees: Perhaps I should point out that if Amendment No. 34 is agreed to, it will not be possible to call No. 35.
Lord Rochester: I should like very briefly to support this amendment. An employer should surely not need a period as long as 12 months from the time when he should have established a deficiency until he makes a deduction from wages. Three months is quite long enough and I look forward to hearing from the Minister that he agrees, or, if he does not, why.
Lord Trefgarne: Before the noble Lord, Lord Stoddart, was so objectionable, if he will forgive me for saying so, I was thinking of offering some comfort to the noble Lord on this amendment. The fact of the matter is that my family comes from South Wales as well and I am quite aware of the matters to which he refers. I do not think it lies very well in the mouth of the noble Lord to accuse me of sneering as he said I was. The fact of the matter is that the sort of sentiments we hear from noble Lords opposite from time to time seem to me to represent attitudes about a century out of date, but be that as it may.
The Government introduced amendments during Committee stage in another place to ensure that deductions relating to cash shortages or stock deficiencies would be entirely prohibited if there was an unreasonable delay between the date the cash shortage or stock deficiency occurred and the date the employer made a deduction from wages in respect of that shortage or deficiency. It was said during that debate that there is nothing magical about the period of time one chooses, but 12 months was mentioned as a reasonable period. The amendments seek to reduce this period to three months. I really believe that in certain cases that is too short a period to enable an employer to discover the shortage and consider whether, taking everything into account, he really wants to make a deduction on account of a shortage.
I am supported in this view by the existence in the Bill of the requirement that if an employer could reasonably be expected to have found out about a shortage earlier than the date on which he did the deduction will be lawful only if it is made within 12 months of the date on which he ought to have found out about its existence. This I am certain provides the necessary safeguards and will prevent employers, who I am sure would be few in number, who decide to victimise a worker for whatever reason from dredging up a lot of old events on which they took no action at the time and starting to make deductions. I hope that those considerations will persuade the noble Lord not to press his amendment.
Lord Stoddart of Swindon: Let me first of all apologise to the noble Lord. If he was not sneering, I must confess it appeared that he was. But of course I welcome him as a compatriot. I accept that he was not in fact sneering at the difficulties that poor people have.
I listened to the noble Lord very closely. I understand from the Bill that an employer may not deduct from his employee amounts that the employer ought to have located within 12 months. I do not quite know how that is to be discovered. Therefore, I think that the assurance the noble Lord has given is not satisfactory. I still believe that the three-month period is the more satisfactory one. I believe it is adequate for the protection of the employer and I believe it is much more satisfactory from the point of view of the employee. Therefore I fear I must press this amendment to a division.
7.33 p.m.
On Question, Whether the said amendment (No. 34) shall be agreed to?
Their Lordships divided: Contents, 57; Not-Contents, 72.

DIVISION NO.4

CONTENTS

Airedale, L.

McCarthy, L.

Amherst, E.

McIntosh of Haringey, L.

Bacon, B.

Mackie of Benshie, L.

Barnett, L.

Mar, C.

Blease, L.

Morton of Shuna, L.

Brockway, L.

Murray of Epping Forest, L.

Carmichael of Kelvingrove, L.

Nicol, B.

Cledwyn of Penrhos, L.

Parry, L.

Crawshaw of Aintree, L.

Perry of Walton, L.

David, B. [Teller.]

Ponsonby of Shulbrede. L.

Diamond, L.

[Teller.]

Ennals, L.

Prys-Davies, L.

Ewart-Biggs, B.

Ritchie of Dundee, L.

Fisher of Rednal, B.

Rochester, L.

Gallacher, L.

Ross of Marnock, L.

Glenamara, L.

Sainsbury, L.

Graham of Edmonton, L.

Shepherd, L.

Grey, E.

Stoddart of Swindon, L.

Hampton, L.

Strabolgi, L.

Hatch of Lusby, L.

Taylor of Blackburn, L.

Houghton of Sowerby, L.

Taylor of Gryfe, L.

Jeger, B.

Turner of Camden, B.

John-Mackie, L.

Underhill, L.

Kagan, L.

Wedderburn of Charlton, L.

Kaldor, L.

White, B.

Kennet, L.

Wilson of Langside, L.

Kilmarnock, L.

Wilson of Rievaulx, L.

Lockwood, B.

Winstanley, L.

Lovell-Davis, L.

Ypres, E.

NOT-CONTENTS

Alexander of Tunis, E.

Marshall of Leeds, L.

Belstead, L.

Massereene and Ferrard. V.

Birdwood, L.

Maude of Stratford-upon-

Boyd-Carpenter, L.

Avon, L.

Brabazon of Tara, L.

Merrivale, L.

Brookes, L.

Molson, L.

Brougham and Vaux, L.

Monk Bretton, L.

Cameron of Lochbroom, L.

Monson, L.

Campbell of Alloway, L.

Montgomery of Alamein, V.

Carnegy of Lour, B.

Mottistone, L.

Constantine of Stanmore, L.

Mowbray and Stourton, L.

Cox, B.

Munster, E.

Craigavon, V.

Murton of Lindisfarne, L.

Davidson, V.

Onslow, E.

De La Warr, E.

Orkney, E.

Denham, L. [Teller.]

Pender, L.

Faithfull, B.

Plummer of St Marylebone.

Ferrers, E.

L.

Ferrier, L.

Polwarth, L.

Gardner of Parkes, B.

Renton, L.

Glenarthur, L.

Rochdale, V.

Gridley, L.

Rodney, L.

Halsbury, E.

Sanderson of Bowden, L.

Hives, L.

Savile, L.

Holderness, L.

Shannon, E.

Hooper, B.

Skelmersdale, L.

Hylton-Foster, B.

Strathcona and Mount Royal,

Inglewood, L.

L.

Kaberry of Adel, L.

Swinton, E. [Teller.]

Kimball, L.

Teviot, L.

Lane-Fox, B.

Tranmire, L.

Layton, L.

Trefgarne, L.

Lindsey and Abingdon, E.

Trumpington, B.

Long, V.

Vaux of Harrowden, L.

Lucas of Chilworth, L.

Vickers, B.

Lurgan, L.

Vinson, L.

Macleod of Borve, B.

Wise, L.

Marley, L.

Resolved in the negative, and amendment disagreed to accordingly.
7.41 p.m.
Lord Brabazon of Tara: In moving that the House do now resume I suggest that we do not return to consideration in Committee on this Bill until twenty minutes to nine o'clock. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Representation of the People Regulations 1986
Viscount Davidson Viscount Davidson rose to move, That the draft regulations laid before the House on 13th May be approved. [23rd Report from the Joint Committee.]
The noble Viscount said: My Lords, I beg to move that the Representation of the People Regulations 1986 be approved. Similar sets of regulations for Scotland and Northern Ireland are on the Order Paper and, if your Lordships agree, it might be for the convenience of the House if I spoke to the three sets of regulations together. The Joint Committee on Statutory Instruments has considered all three sets of regulations and has made no comment.
These regulations replace the Representation of the People Regulations 1983. They are needed to lay down procedures for British citizens abroad to register as overseas electors and for holidaymakers and others to apply for an absent vote under the new provisions of the Representation of the People Act 1985. The regulations have been the subject of full consultations with representatives of the political parties and the local authorities and reflect the many helpful comments we received.
Regulations 23 to 28 deal with the new procedures for overseas electors to make declarations with a view to their being included in the electoral register. The same procedures will apply to Members of your Lordships' House resident abroad who, subject to the requirements in the Act, may register as electors at elections to the European Assembly. This is covered by Regulation 14.
Part III introduces changes in registration procedures including, for England and Wales, the identification of new names on the register and, for England and Wales and Northern Ireland, a regulation allowing the draft register to take effect as the final register. Part IV introduces new provisions on absent voting. Applicants for an absent vote at a particular election will need to say why they cannot reasonably be expected to vote in person. Applicants for an indefinite absent vote for an indefinite period will have to meet the countersignature and other requirements in Regulations 64 and 65. Part V allows the proceedings on the issue and receipt of postal ballot papers to be taken together when the polls at elections are combined, and Part VI deals with the combination of polls.
The regulations for Scotland and Northern Ireland contain similar provisions except in the few cases I have mentioned, and with the exception also of Regulation 13 of the Northern Ireland regulations relating to documentary evidence of identity.
We plan to make a commencement order as soon as possible following the approval of these regulations bringing the remainder of the 1985 Act into force. Our intention is that overseas electors should be able to start making their declarations straight away. The changes relating to applications for absent votes will be brought into force from 1st January next year and other changes relating to the conduct of elections will apply to elections held on or after 16th February 1987. Post Office regulations will be made before then dealing with the free delivery of unaddressed electoral material.
We shall be making new local elections rules later this year in order to apply to local elections the changes which have been made by the 1985 Act and these regulations to the parliamentary elections rules. New European Assembly regulations will also be made so that the new absent voting provisions and provision on the lines of these regulations can apply at European Parliament elections held on or after 16th February.
I hope that your Lordships will be content to approve the regulations. I beg to move.
Moved, That the draft regulations laid before the House on 13th May be approved. [23rd Report from the Joint Committee]—(Viscount Davidson.)
Lord Underbill: My Lords, I welcome the explanation of these regulations given by the noble Viscount, which I am sure will be appreciated by all concerned with running elections, both on the official side and on that of the election agents. We now have up-to-date regulations.
I am pleased to have the assurance from the noble Viscount that these regulations have been the subject of consultations with local authorities and the political parties and that no items are included which were not covered by primary legislation, particularly the 1985 Act. I am particularly pleased to note the extension under the Northern Ireland regulations—No. 13, I think—to which the noble Viscount referred, which extends the documents which must be presented by electors to polling stations to include a driving licence issued in Northern Ireland and a merchant seaman's card. Those regulations will be appreciated by all in Northern Ireland.
With those few remarks, I support the three regulations.
On Question, Motion agreed to.

Representation of the People (Scotland) Regulations 1986
Viscount Davidson Viscount Davidson rose to move, That the draft regulations laid before the House on 15th May be approved. [23rd Report from the Joint Committee.]
The noble Viscount said: My Lords, I beg to move.
Moved accordingly, and, on Question, Motion agreed to.

Representation of the People (Northern Ireland) Regulations 1986
Viscount Davidson Viscount Davidson rose to move, That the draft regulations laid before the House on 19th May be approved.
The noble Viscount said: My Lords, I beg to move.
Moved accordingly, and, on Question, Motion agreed to.

Consumer Safety (Amendment) Bill
7.48 p.m.
Baroness Gardner of Parkes: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Baroness Gardner of Parkes.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD MURTON OF LINDISFARNE in the Chair.]
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 1:
Before Clause 1, insert the following new clause:
("Offence of supplying unsafe goods.

.—(1) A person shall be guilty of an offence if he supplies or offers or agrees to supply goods or exposes or possesses for supply goods which do not provide the standard of reasonable safety which a purchaser is entitled to expect taking into account all the circumstances including—

(a) the presentation of the goods;

(b) the use to which it could reasonably be expected that the goods would be put;

(c) the cost of the goods; and

(d) the state of scientific and technical knowledge.

(2) The Secretary of State may make regulations containing such provisions as he considers appropriate to specify standards of safety in relation to prescribed classes of goods and it shall be a defence to a charge of committing an offence under this section to prove that the goods complied with such standards in relation to the hazard in question.

(3) It shall be a defence to a charge of committing an offence under this section to prove that the goods complied with safety requirements in relation to the hazard in question.").

The noble Lord said: In moving this amendment I speak also to Amendment No. 2 relating to Clause 2 and Schedule 1. The two amendments hang together.
By way of explanation I should state that the noble Baroness, Lady Stedman, who spoke on behalf of the Association of County Councils at Second Reading and who should have been here tonight to speak to these amendments on behalf of the association, unfortunately is not able to be present. As I happen to be vice-president of the ACC, I have been asked to speak briefly on these matters today.
I do not intend to press any of these amendments to a Division because I am quite aware of parliamentary protocol and procedure in respect of the Bill making progress in another place, but I shall be grateful to have the Minister's observations. The ACC has asked me to say that if the Bill is not amended it could set unfortunate precedents for the expected government safety legislation which it hopes will include a duty to trade safely and will relate to product liability. The aim of the Bill to enable dangerous goods to be kept off
226
the market can be achieved, the association believes, by workable compensation provisions and a 72-hour detention period.
The amendments are moved, as the House was reminded at Second Reading, against the sombre background of some 3 million people requiring hospital treatment for injuries sustained in accidents in the home, of whom about 7,000 die. Many of these accidents are avoidable, like the death in Leeds last Christmas of a five-year old child who died from playing with an imported toy pony. I am very grateful for the opportunity to speak on this matter in company with the promoter of the Bill, the noble Baroness, Lady Gardner of Parkes, and I am delighted to share her interest.
I know that MK Electric, which is the largest employer of labour in Edmonton, and a firm which must be known to the noble Baroness, Lady Gardner, will have as much interest as anyone, and I notice from the report of the Second Reading that there is a wide range of consumer bodies which are interested. Equally I am certain that many trade and commercial bodies have their own reputations to protect. I know that only last year MK Electric celebrated having made 1 million safety plugs, and Alec Fletcher, who was then a Minister, went along and congratulated the company on its standards. I look forward to what the Minister has to say and I beg to move the amendment.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): Since the noble Lord, Lord Graham of Edmonton, has invited me to make some comment on the new clause which is Amendment No. 1, it may be for the convenience of the Committee and indeed my noble friend if I do so at this stage.
This clause seeks to introduce a version of the general safety duty that is proposed in the Government's White Paper on the safety of goods. Perhaps I may say at this juncture that I am glad to note that the noble Lord opposite is taking this opportunity to probe the Government's intentions in this matter. Let me make it absolutely clear that we are committed to introducing a general safety duty. We shall do this in conjunction with legislation to implement the European Community directive on product liability at the earlest possible opportunity.
While I can only applaud the intention of the noble Lord in putting forward this new clause at this stage, in an attempt to introduce the general safety duty now, I must say that in our view it is not appropriate to extend the current Bill, and I think that the noble Lord accepts that. This Bill is about the enforcement of existing consumer safety legislation. I think that to include this new and wider offence would be very difficult. The inter-relationship between the general safety duty and the product liability directive is very complex and I assure the Committee that they can only be dealt with sensibly together.
It may be helpful if at this stage this evening I say a few words as to why these complexities will arise, because I think it may help us when we come, perhaps a little later, to discuss the wider implications which are in the back of our minds. As the clause is drafted—and I have no quarrel with that—it leaves a

227
number of points unclear, quite apart from the unanswered questions about its relationship with the product liability directive.
For example, what is to be the scope of the new offence? Is it intended to cover all goods, including goods intended for the workplace—these are already covered by the general duty in Section 6 of the Health and Safety at Work Act—or is it really intended just to cover consumer goods, as is our proposal for a new general safety duty? Why is there a reference to a purchaser of the goods in line 4, when the offence is geared to the supply of goods which may not involve a sale as such and which may be of concern to many users of the goods other than the purchaser? At what time is the state of scientific and technical knowledge to be relevant? Is it at the time that the product was first put into circulation? What measures for enforcement will apply, given that the definition of relevant provisions does not include this? Would commission of the offence also attract civil liability? Those are just a very few of a great number of questions that will have to be answered, and those answers will not be very easy to arrive at, if we are to introduce a sensible, workable and enforceable provision as complex and far-reaching as the general safety duty.
So with all respect to the good intentions behind the clause, I say to the noble Lord that I am happy that he does not intend to press this amendment. I hope that he and those with whom he discusses these matters, and indeed my noble friend Lady Gardner of Parkes also, will perhaps do a little more work on the wider range of questions which will have to be answered and to which we shall provide answers, as I say, when we bring forward our legislation. As I said at the opening of my remarks, this will be just as soon as parliamentary time allows.
Baroness Gardner of Parkes: I thank the noble Lord, Lord Graham, for moving the amendment, which is an interesting one, and I also thank the Minister for his reply. I am not happy with the amendment as it stands because it seems to me that although very naturally it would be put forward by the Association of County Councils, it is placing the onus on the trader and removing the onus from the inspectorate. This of course would suit the county councils, particularly in view of the less favourable points about the number of hours and whether the authority would be liable if the goods proved to be satisfactory. So I can see that they have cause for concern.
This amendment seems to me to aim at moving responsibility soundly away from the county councils and on to the trader. I think that the trader does have a responsibility, and I see the point in the amendment of the words:
"taking into account all the circumstances."
So there are ways out. However, it seems to me that as the amendment is drafted it will be better considered (as I hope and believe it will be) when we look at this matter in a much wider context at a later stage. I think that at the present time this Bill aims simply at taking a first step of introducing the means of slowing down the presentation of goods and having the opportunity
228
to inspect them. I am grateful that the noble Lord does not intend to press his amendment.
Lord Graham of Edmonton: I am grateful to the Minister for what I think is a sympathetic response to the intention of the amendment and I also thank the noble Baroness for her reception of it. The noble Baroness is absolutely right, and her final words were very pertinent. What we have in the Bill is a first step; and there is the promise of even more to come. I hope that, as the Minister said, between now and then even more work can be done upon it, so that what we shall have in future will be even better than that which we have now in draft. I am very grateful to the noble Lord. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2 [Power of Commissioners to detain goods]:
[Amendment No. 2 not moved.]
Clause 2 agreed to. Remaining clauses agreed to.
Schedule 1 [Schedule to be substituted for Schedule 2 to the 1978 Act]:
[Amendment No. 3 not moved.]
Schedule 1 agreed to.
Remaining schedule agreed to.
House resumed: Bill reported without amendment: Report received.
Lord Brabazon of Tara: My Lords, I beg to move that the House do now adjourn during pleasure until 20 minutes to nine o'clock.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8 until 8.40 p.m. ]

Wages Bill
House again in Committee on Clause 2.
[Amendment No. 35 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 36:
Page 4, line 43, leave out from beginning to end of line 10 on page 5, and insert ("it shall not be lawful for the employer to make any further deduction in respect of that pay day").
The noble Lord said: This amendment attaches to Clause 1(4) which deals with an old problem. There is a sense in which it may be said to deal with reductions as against deductions; that is to say, the problem where the calculation of wages is determined by what the worker would certainly see as a deduction for a cash shortage or stock deficiency. There are a number of old cases on the question which relate to the Truck Act 1896 and to certain other statutes. If one says that there shall not be certain deductions from wages, one has to ask what wages are. Although the Bill at later clauses does something in that regard, here it faces the problem of what one says if the wages are calculated by reference to the events or other circumstances such as

229
bad workmanship, which might be drafted in a different way as deductions.
Although there are old cases, I hope that I am not a century out of date, as we are constantly told things are in this Bill in our debates. There were more recent cases in 1945 which held that the calculation of wages by reference to the events which reduce the amount payable were reductions and not deductions.
Where that is the case, there would be an easy evasion here of perhaps the whole Bill. Perhaps we should look again at some of the matters we have discussed already on these clauses in that light. But, as I understand subsection (4), where wages are determined by reference to cash shortages or stock deficiencies and the gross amount is less than the gross amount that normally would have been payable, what is then to happen? Subsection (5) goes on to say that the employer is to be allowed to make further deductions, treating the net sum of wages, as it were, as the starting point. That at least is how I read it. We say that that is not the right approach. Once the reductions have been made on account of cash shortages or stock deficiencies in calculating the wages, in those circumstances the employer should have no more.
This has been said a number of times this afternoon but perhaps in the more placid climate of a post-prandial session I may say it again calmly but clearly. We are talking about workers who earn low wages and who are taking gross in many cases £50, £60 or at any rate no more than £70 a week. After the statutory deductions—after tax and the rest of it—they are not taking home vast sums. If a worker in that category is having his wages calculated by reference to cash shortage or stock deficiency, we are talking about someone whose family is taking from that wage-earner no princely amount. Wherever we come from, we should all recognise that that is what the Bill is about.
Our amendment would replace the approach of subsection (5) to the situation described by subsection (4). We would say that where cash shortages or stock deficiencies have already been taken into account, there ought to be no more. It seems to me that the Government face a difficulty if they do not accept that solution or at any rate something along those lines. As the Bill is drafted, the Government place great store by the fact that those in retail employment will be protected by the 10 per cent. limit.
In subsections (4) and (5) is there not an easy method of evading the 10 per cent, limit? If the petrol company puts a clause into the forecourt worker's contract, "Your wage is calculated by the following formula", and then builds in an element for, let us say, stock deficiencies or a cash shortage, without a clear limit being stated—it could be up to 50 per cent. of the wage in practice—that would be a contract formulated by reference to reductions. After the wage is calculated by reference to the reductions for cash shortages or stock deficiencies, the employer is now, it seems, to have another chance to deduct up to 10 per cent. more from the wages if subsection (5) remains unamended.
Our amendment does not deal wholly with the first of those two problems, but I suggest that the Bill does not either. I hope that the Minister will say something about the problem of reductions; that is to say, the lack
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of a limit on reductions in calculating retail employees' wages. That might save us having to raise that issue on clause stand part. I raise it now to help progress, although progress is not exactly how we would describe what is happening with the Bill.
The amendment, however, goes to the other problem. By however much the wage is decreased with the reduction formula, can it be right that further deductions should be allowed? To allow such a procedure makes nonsense of the 10 per cent. limit. Any well-advised employer, and certainly any well-advised rogue employer, would be able to put it aside with great ease. It is on those grounds that I beg to move the amendment.
Lord Trefgarne: Subsections (4) and (5), to which the amendment is addressed, deal with the situation where all or a part of the wages of a worker depend on the absence or extent of any cash shortage or stock deficiency. The aim of the subsections is to remove a possible loophole by saying that if an employer pays a bonus related to the absence or size of a cash shortage or stock deficiency, any failure to pay the bonus is to be treated as a deduction from wages related to cash shortages or stock deficiencies and is covered by the protection of Clause 2, which in effect means that the unpaid bonus must not exceed 10 per cent. of gross wages; that is, basic wages plus bonus.
Amendment No. 36, in amending subsection (5), appears to have the effect of removing any require-ment that any shortfall in gross wages paid due to a shortage or deficiency should be treated as a deduction and be subject to the 10 per cent. limit. It only prevents a further deduction being made in respect of the pay day in question. That would allow deductions from gross wages to be calculated without limit. That removes the protection which the provision seeks to achieve in respect of workers who are employed under certain bonus arrangements. I do not believe that that was what the noble Lord intended, but it is I fear the effect of what is proposed. I hope that the noble Lord will therefore see fit not to press the amendment.
Lord Wedderburn of Charlton: I have to admit that that was not my interpretation of the two subsections put together. It was our interpretation that the gross amount in Clause l(4)(b) was so treated that when we came to the end of subsection (5) the gross amount was still available for deductions. I shall read with great care what the noble Lord the Minister said and see whether he is correct in saying that we were incorrect in our understanding of the two subsections. Should that be so, I shall be happy. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3 [Payments by workers in retail employment on account of cash shortages etc.]:
[Amendments Nos. 37 to 40 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 41:
Page 5, line 27, leave out ("on") and insert ("seven days before").
The noble Lord said: It will be convenient if I speak also to Amendments Nos. 42 and 43. It will perhaps be

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courteous to the Committee if I explain that Amendment No. 40, which was meant to go with these amendments for discussion on the same point, has fallen by the wayside through having acquired a wrong page number. It should have referred to page 6. It has appeared as referring to page 5. If that was our fault, we offer our apologies to the Committee with regard to the list.
This is perhaps a small point which would be covered by the three or, were they all there, the four amendments. In our submission, it brings about a particularly unfair result. It relates to the demands for payment for an alleged stock deficiency, and so on. The Bill says that the employer must make his demand in writing under Clause 3(2)(b) on one of the worker's pay days. There is the same structure in other parts of the clause.
The other amendments to which I am speaking raise the same issue. If we posit the position of a worker expecting his or her wage on a Friday, it seems that the Bill allows the employer to make his written demand on that day. The broad purpose of our amendments is to replace that structure by a period of notice which would have certain objectives. The purpose relates to the realities of the day on which the worker's wage is being paid. Commitments have been entered into. It may be that the family is in debt. Perhaps the milk bill has to be paid on the Saturday, and the wages are payable on the Friday. The rent may be due in the following week. Other payments may be due. When the worker returns on the Friday, does he have to say, "Well, they told me that there was a stock shortage and gave me this piece of paper and a demand. They said I had to pay up £9. Don't ask me how we are going to manage but there it is"?
If the limit of 10 per cent. is to mean what I take it to be intended for—after all, what is the purpose of the 10 per cent.?—is it not a recognition that those who are most at risk (they are said to be those in retail employment) of this kind of deduction should not suffer such penalties by the removal of their wages that their family life and way of living is wholly destroyed or endangered? If that is going to mean anything in terms of the realities of life, surely the employer should be required to give some notice to the worker as to the payment which he requires of him. I appreciate that it will be said, "Oh well, then you will create some asymmetry as between deductions and payments; the employer will simply deduct instead of demanding payments". The sense that I have gathered of the debate has been at least a hope—we hope that we can find a way with some code of practice or the like to bring this home to employers—that with regard to deductions some notification of the practice or the likelihood or expectation of their life could at least be required of the employer to the employee.
It seems that there is no difficulty as regards payments. That may be difficult to put into the Bill in the light of the discussions that we have already had. Why should the employer not give some days' notice to the worker that the payment is required? We have suggested seven days. We have obviously suggested seven days for the very good reason that the logic of our reasoning would be that at least one should go over
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from one pay day to the next, because the family may be able to meet its standing debts and requirements during that week and at least make some kind of plan for the next. That does not seem altogether unreason-able. Why should the employer be able to demand payment immediately?
I appreciate, and it may be that the noble Lord the Minister can explain this further, that in a sense the Bill does not say that the demand for payment must be for payment there and then. It is the demand of which the Bill speaks. On the other hand, as I read it, the Bill does not appear to prevent the employer—again the rogue employer—from demanding payment there and then. The sum total of this perhaps small but very important point for the worker and his family who are involved is: why should there not be some short period of notice with regard to demands for payment? In that probing way, I beg to move the amendment.
Lord Trefgarne: Clause 3 establishes controls on the amount of the instalments the employer may require the worker to pay him where the worker is liable under a contract or consent to pay for cash shortages or stock deficiencies. These are strong controls which require each demand to be made on a pay day. They limit the employer to demanding 10 per cent. of the wages payable on that day and require the employer to notify the worker in writing of his total liability and of each demand for payment.
The further requirements in the amendments that an employer must make any demand seven days before pay day, but must make the first demand seven days after the first day following the date when notification of the worker's total liability is given to him, are I believe unnecessary. The clause is designed to place controls on the amount of the instalments which an employer may demand that a worker pay where the worker is liable under a contract or consent to pay for cash shortages or stock deficiencies.
The clause does not control the timing of payments. There is no similar control on the employer if he wishes to make a deduction rather than require payment from the worker, and there is no reason why the two procedures should be treated differently. In any case, the first amendment will often be unworkable in relation to both payments and deductions. In the case of a weekly paid worker, the employer will often not know what his pay will be seven days before his pay day, and will therefore be unable to work out the amount that he is entitled to demand. Most important, I do not believe that the amendment would provide any particular additional advantage to either party. The existing controls in the clause are sufficiently strong and I hope that the noble Lord will not pursue the matter.
9 p.m.
Lord Wedderburn of Charlton: Whether or not I pursue the amendment, we are clear that the employer can pursue a demand for payment there and then. After all, what are the reasons given for not allowing the vulnerable worker a period of notice to pay this money? It is argued that it is unnecessary. That means that it is unnecessary for the workability of the Bill. It is argued that there is no control over the timing of

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payments. That is true, but it is something that we want to put into the Bill. It is argued that it does not apply to deductions. No, it does not, according to our amendment, but we could fashion an amendment to make something apply to deductions, if that really was an objection. The Minister knows that very well. The real objection appeared to be that the employer might not know what the employee was going to be paid a week from now. It is true that there may be variations week to week in the actual payments made to the workers we are talking about. But an employer could easily play safe by keeping within a 10 per cent. limit in most cases without any difficulty. It is then said that there is no particular advantage. I must say, no particular advantage to whom? To the wife, to the children, to the milk bill, to the rent? Of course there is a particular advantage.
We come to the nub of the matter time and time again. It is not the Minister's fault that he personally has to defend the Bill. It is a Government Bill. He takes collective responsibility with all those who put it forward. But whenever you come to an advantage or a disadvantage, the disadvantage is on the worker and the advantage is on the employer. What is so interesting about the Bill is that it is not a Bill about trade unions. Indeed, I do not think that trade unions have been mentioned from the Government side of the Committee. That is understandable. We would want such workers recruited and organised in trade unions because that is their real defence. It is very hard to organise such workers and it is very hard for such workers to be members of trade unions. There is a mass of evidence of people being dismissed for threatening to join trade unions and not being able to pursue redress in tribunals. There is no particular advantage, says the Minister. It is no particular advantage to the employer.
Lord Trefgarne: There is less, I believe, between the noble Lord and myself than he suggests. I wonder whether he has studied Clause 3(3)(a). If so—and I am sure that it is the case because he is so assiduous—he will have seen that the worker has some notice under the Bill's provisions. The Bill states:
"A demand for payment … shall not be made earlier than the first pay day of the worker following the date when he is notified of his total liability in respect of the shortage".
While he may not get the full period that the noble Lord seeks, he will certainly get some.
Lord Rochester: Is that not almost an accident of timing? I have some sympathy with the general point made by the noble Lord, Lord Wedderburn. It seems reasonable that a period of notice should be given and that there should be some even-handedness between the employer and the employee in the matter. I wonder whether there is any prospect before the noble Lord, Lord Wedderburn, determines what he should do about the amendment, that the noble Lord the Minister may hold out some hope that he is willing to give further consideration to the matter before the next stage of the Bill.
Lord Trefgarne: I am always willing to undertake further consideration if I think it likely to be fruitful. I
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believe, however, that there are real difficulties in the matter. The noble Lord, Lord Wedderburn, somewhat brushed aside one rather important difficulty. It is that the employer will not know the amount of the worker's pay very much in advance. I am thinking particularly of lower paid workers about whom the noble Lord, Lord Wedderburn, is understandably most concerned in this connection. They are very often remunerated as much by overtime as by their basic wage. It is not possible to determine how much overtime is going to be worked until very close to pay day. That affects substantially, or may affect substan-tially, the amount of the deduction that would be permitted under the provisions of the Bill. I believe that the noble Lord, Lord Wedderburn, and perhaps the noble Lord, Lord Rochester, have under-estimated the difficulties of what they propose. The noble Lord, Lord Wedderburn, will perhaps on reflection agree with that.
Lord Wedderburn of Charlton: I am not sure whether I am getting up or sitting down, but I take the Minister's point. I had, of course, noticed, although I did not mention it, that Clause 3(3)(a) requires a notification to the worker of his total liability. Presumably that means that the employer knows the score at that point. So the argument that the employer does not know, at whatever point that is, goes by the board. He knows the amounts—
Lord Trefgarne: I am sorry if I did not make myself clear. Yes, the employer may indeed know the liability. What he will not know is the amount of pay that will be due to the worker because he will not know how much overtime he has worked or how much bonus he is entitled to.
Lord Wedderburn of Charlton: Now we have it. Our discussion, as is usual after dinner, is very fruitful. Now we have it that the employer a few days before—perhaps we couched it wrong with "seven"—will know the liability and will know roughly the sort of amount that the employee is going to be paid. One can press this so far, I agree, in respect of the garage attendant, the forecourt attendant, the shop assistant, and the stock room worker, if in retail. Yes, it may vary a little, but we are not talking about vast sums when we finally discover that X has £3 of overtime, instead of none.
A few days before, as the Minister points out, an employer knows about the liability and he has a good idea of the sort of wage that is coming at the next pay day. Why cannot he give some sort of notice? I understand that the Minister says it is difficult; I am eager to join him on the field of difficulty. What I would not do is join him on the field of saying that there is no advantage in discussing this or of proposing this type of thing. If it is difficult, by all means let us discuss it and find an answer. Is not the Minister with me in saying that there is some point in telling the worker a little ahead? Surely there is merit in the argument of a low-paid worker knowing a little ahead that he will have a deduction or a payment. It really applies to both. Surely there is an advantage for him in that.

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Is there a disadvantage for the employer? The noble Lord is really saying that seven days off there may be, but a few days off, is it so great? Let us go back to what the Bill actually allows: after the notification to the worker, there is the demand and the payment there and then. Therefore, if we are genuinely looking at the balance for a worker of this kind in retail with the 10 per cent. limit, in the light of the discussions we have had, is it right actually to allow that, whatever the safeguard may be? It may be that we have asked for too much.
I very much hope that the noble Lord can say to us that at least he will have a look at this proposition which emerges from these amendments. Perhaps out of their ashes there is a point to be made about giving the worker and his family some time in advance some idea that such a reduction—and I use the word broadly and neutrally—is to be made in the amount that he expects to take home on that pay day. The Bill does not do that. That is very unfair. If the Minister can find no solace for us beyond that, then I shall—
Lord Trefgarne: As I said earlier, I am always willing to have a look at the propositions which the noble Lord puts to me if I think that there is some likelihood that we can reach an accommodation with him. However, I am bound to say, because of the difficulties which I have already recited, that I do not see much prospect of that. However, if it will give the noble Lord some comfort, I shall certainly agree to look at the matter further between now and the next stage.
Lord Wedderburn of Charlton: I am grateful for that. I do not expect too much; I am not quite sure whether I expect anything at all. However, the point has been made and I am sure that the least we can all do is look at the arguments. I am hopeful that when the Minister does that in the warm light of another evening, he will be able to press the points a little further. After all, we are a long way from our demand for reasonableness, which I know that he has rejected. We asked for reasonableness; we asked for no deductions where there was no dishonesty or wrong-doing. We are now asking for a few days before the money is taken away. I hope that the Minister will be able to find it in his heart—and more particularly in his head, because it rests on the case that he made as much as the case that I made in that exchange—to assist us. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 42 to 45 not moved.]
Clause 3 agreed to.
Clause 4 [Provisions supplementary to ss. 2 and 3]:
9.15 p.m.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 46:
Page 6, line 34, after ("termination") insert ("by lawful notice given to him by the employer").
The noble Lord said: Now we come to the employer-takes-all-clause—no more 10 per cent., but
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final wages; and, so long as various requirements are met which are not difficult to meet, all the wages can go. I was astonished at the number of noble Lords on all sides of the Committee who said to me after our very first debate in which the Barratt case was discussed, "Good heavens, I had no idea that that sort of thing went on". As the noble Lord, Lord Coleraine said in a previous intervention in the Committee, one week Anthony Barratt had the whole of his wages stopped in accordance with the broad and, as the court said, arbitrary clause of the contract. That could happen here even with retail workers who are most at risk. When it comes to the final instalment of wages it is possible to take the lot, and for them to be paid nothing where that is within the other requirements.
This is a limited amendment. We are not yet at the point of objecting to the whole notion of final instalment. For the purposes of this amendment we are looking at one question, and one question alone. If the employer is to have this penal power, as we see it—or at any rate, to put it neutrally, this power of deduction without limit—then surely he should not be entitled to grant that power to himself by his own act; or secondly, and alternatively, he should not be entitled to grant that power to himself by his own unlawful act.
The amendment goes to both points. The new arrangement, the lack of a 10 per cent. limit, applies in respect of a termination of the contract. It does not seem that that notion of termination is qualified in Clause 4. At least, I have not found that qualification. Indeed, Clause 4(1)(a) speaks of "termination for any reason". That, it seems, means termination lawful or unlawful. Our amendment would limit first the dismissal to a lawful dismissal.
Otherwise, in effect one destroys the employee's rights for unfair dismissal. If it is an unfair dismissal the employee can take a claim—if he has two years' qualifying employment, it is true—to the industrial tribunal, but, unfair or not, so long as the employer has terminated the contract this Bill seems to say that he can enforce deductions under the contract up to, and including, 100 per cent.
It is perhaps something that should be immediately said as a qualification of the proposition I have just put to the Committee that the only people who can go to industrial tribunals for unfair dismissal are employees, and this Bill ranges more widely than employees, stricto sensu, and includes workers who would not have such a right of approach to the tribunal on unfair dismissal. But we say secondly, as the amendment says, that the termination should be limited to lawful notice given by the employer. We say that because it is not at all clear what is meant by termination of the contract. Therefore, we take our stand on the Government's desire not to be unclear.
There are various kinds of temination of a contract and they cause a great deal of difficulty in employment law. A summary dismissal does not necessarily terminate the contract in every circumstance, although the House of Lord's Judicial Committee has recently held in the case of West London Co-operative Society v. Tipton 306, 2 Weekly Law Reports, for this year that a summary dismissal takes effect there and

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then, so that for most purposes that is the date of the termination. But if there is an appeal procedure and the employee goes through it and wins, then he will be reinstated retrospectively.
We may contrast with a summary dismissal a case where the employee rests upon an allegation of a constructive dismissal; the now well-established test that the contract is not terminated by a constructive dismissal unless and until the worker accepts the termination although it may be that in some cases the court will see him as having no option but to accept. The precise ways in which a worker ought to elect to treat the contract as terminated in a constructive dismissal situation are still a matter of some debate, and there are cases most months in the specialised law reports in the matter. Then, lastly, there is the case of a notice—even an illegal notice in the sense that it is less than the statutory minimum notice to which an employee is entitled—and that seems to mean that if the contract terminates it terminates no earlier than the expiry of any notice.
In all those types of case, which week is the last period? I can well understand that it may be said, "Well, there is no difficulty with a summary dismissal, or with a dismissal with notice, which is what is envisaged". But to say "termination for any reason" may beg a lot of questions. It is noticeable that the clause does not use the phrase common in employment law which would be the "ending of a contract and the effective date of termination". If the clause referred to the pay period which was the last before or on the effective date of termination, there would be some authority to turn to. If that is meant, perhaps that is what should be said.
Our amendment does not go so far as trying to solve all these problems. It does, I submit to the Committee, cover most of the difficulties by saying that there must be a termination by notice and that it must be a lawful notice. Clearly therefore the contract ends on the expiry of that notice. The important element which is built in, whatever else may be wrong with our amendment, is that the employer should be held to the necessity of acting lawfully in terminating the employment. Otherwise the clause permits him to take the larger amount by way of deduction by an act which in itself between him and the employee, him and the worker, may not be a lawful termination of the employment.
If the noble Minister can satisfy us on any of those points we shall be very happy. It might be better if this amendment were the vehicle through which the Government had another look at just what kind of termination is meant in Clause 4, having regard to the extraordinarily important nuclear consequences for the employee and worker now they are not to be protected by the 10 per cent. of the deduction. I beg to move.
Lord Rochester: I am not sure if what I have to say would not be more appropriately said on the following amendment, but I shall say it now to save the time of the Committee. It seems to me that the most important provision in this whole clause is really rather harsh, to say the least. As I understand it, the limited protection that there is for employees against
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having large deductions made from their wages will not apply to their final payment of wages: Not to mince words, if the employer decides to sack a worker he can take the whole of his final week's wages and thus deal him, as it were, a double blow.
I realise that the amendment proposed by the noble Lord, Lord Wedderburn, deals with this point only indirectly, but as he said in his closing remarks it relates to that central feature of Clause 4. I hope therefore that either now or on some subsequent amendment (on which, having spoken now, I shall not again browse) the noble Lord the Minister will have something of comfort to say to us about this general provision.
Lord Trefgarne: The aim of this provision is not only to ensure that workers are not left with little or no take-home pay due to deductions to cover cash shortages or stock deficiencies but also to ensure that employers can obtain sums to which they are contractually entitled. By removing the 10 per cent. limit on deductions from the last instalment of wages, this clause enables the employer to recover all that is still owing to him by a worker on the termination of a worker's employment.
Amendment No. 46 seeks to tighten the control on the deductions for cash shortages or stock deficiencies from the final payment of wages of a worker by providing that the 10 per cent. limit is disapplied only if lawful notice of termination of contract has been given to the worker. If the appropriate notice has not been given, the worker has alternative avenues of complaint via the county courts for breach of contract and to an industrial tribunal under the statutory notice provisions in Section 49 of the Employment Protection (Consolidation) Act 1978. These are adequate legal remedies and it would be wrong to prevent the employer recovering money owed to him by the worker merely because he failed to give lawful notice.
There are occasions when, because of gross misconduct, for example, no notice of termination need be given. It would obviously be unfair to penalise the employer on these occasions. In addition, it is only fair that the employer should be able to recover sums due to him by a worker on the termination of the contract. This amendment seeks to limit his right and I fear, therefore, that I must resist it.
There is a further difficulty. As I have already said, this amendment disapplies the 10 per cent. limit on the final payment of wages only where lawful notice is given by the employer. One unlooked-for effect, I think, would be that if the worker leaves—that is to say, the worker and not the employer gives notice—the employer has to pay the final payment of wages, and even if the worker has a large debt to him he is bound by the 10 per cent. limit. I am certain that that is not something which the noble Lord intended by virtue of his amendment.
There is another point—not one, I think, to which the noble Lord, Lord Wedderburn, would attach much importance but one which I think deserves mentioning nonetheless. I referred earlier to the consultation that took place a couple of years ago on this matter. Responses received then indicated that although a majority of employers were in favour of a

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limit on deductions they did not think that it should apply on termination of employment when the employer should be entitled to recover from the worker what was owed to him. They argued that it was reasonable for a worker's debts to be cleared on the termination of his employment. I have listed a series of difficulties about this amendment which I hope will carry some weight with the noble Lord.
Lord Wedderburn of Charlton: One advantage of debating a Bill with the noble Lord the Minister is the delightful circularity of some of the arguments which are deployed against one and which here have been exemplified, with respect, again—with one exception. That is the exception that most employers do not want what is in the Bill on consultation. I am all in favour of consultation. I believe devoutly in consultation; but I do not necessarily think that one gives a clause merely to what the majority of employers want.
I have to admit that our amendment would not deal with the situation where the employee gives notice. That is true. There would then be a 10 per cent. limit still. That would be an unlooked-for advantage for the employee. I can quite see how an amendment which gave some advantage to the worker is utterly and totally unacceptable. However, the circularity of the basic argument is surely, with respect, this: that the noble Lord says that the employer's claim must be respected on the final payday when it is to be a case of employer takes all because he must be allowed all the sums that he is owed by the worker.
You are owed a sum in law only if you can, in law, recover it. He is not owed more than 10 per cent. on all the other paydays because he cannot recover more than 10 per cent. because the law will say so. If the law went on saying that he could not recover 10 per cent. on the final day, then he would not be owed all these sums except in his own eyes. What you are owed is what the law says you can recover. Therefore it is wholly circular to say—
Lord Trefgarne: I know that the noble Lord is a considerable expert in these matters but I do not think that he is quite correct in that. I think that the question of the debt is a matter of fact. What we are discussing is the basis upon which the debt can be recovered. I suspect—I stand open to correction on this—that it is always open to an employer to recover his debt in the usual way, without deductions from wages, if he thinks fit; but of course that is not what we are discussing.
9.30 p.m.
Lord Wedderburn of Charlton: Of course there may be many different ways, as the noble Lord has suggested. The worker may be able to take different steps in regard, for example, to sums due on inadequate notice. When I said "recover" I meant to use the procedures of the particular matter which the Bill is covering. Therefore what you are—how shall I put it?—owed-recoverable by deduction in law is that which the Bill allows. Therefore if you kept the 10 per cent. limit, you would not be owed-recoverable by deduction. The noble Lord says, "You are still owed", and indeed you may have other procedures. You may
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be able to recover debts in insolvency. There are a variety of procedures you can use, but the law limits them. To say that because you can use some other procedure to recover all or only part of what the sum amounts to does not settle the issue of whether you should be allowed to use a particular procedure and whether the right is a right with a remedy of that kind. Remedies for rights are fashioned here by the Bill; and the Bill says, "Winner take all for the final payday".
I can see that we shall not make a great deal of progress with this, but it is another example of when an amendment throws up some perhaps unlooked-for advantage for the worker. In that case the noble Lord does not say to me, "Now make it equal either way and we will look at it." He says, "There is an advantage for the worker; it is utterly impossible to accept it."
I go back to the final point which I hope your Lordships will consider before the Report stage. It cannot be right to allow an employer to gain the new power to recover the entire wage on the final pay day by an act terminating the employment which is itself unlawful. That cannot be right. I know of no principle of English law which suggests that anyone should arrogate to himself the power to take away a family wage by an act which is unlawfully terminating the employment. So whereas I see the other points the noble Lord the Minister made, I come back to that central point of our amendment and I suggest that that point, at least, really must be looked at before the Report stage. I beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 47:
Page 6, line 41, leave out subsection (2).
The noble Lord said: There is a sense, as the noble Lord, Lord Rochester, said, in which the previous amendment deals with Amendment No. 47, and perhaps it might be convenient if I were to mention Amendment No. 48. Perhaps it is wrong that your Lordships' Committee should continue without a pause to consider for a moment. At any rate, so far as my noble friends and I are concerned the whole idea, however it is brought about, of the final pay day allowing for an unlimited deduction, a total stoppage, seems to us to have no merit whatever.
The noble Lord the Minister has talked about the employer being entitled to get the whole of his debt, but the clause does not balance the need of the worker and his family to have some part of the wage. If there is no such balance to be struck, the entire moral case for the 10 per cent. deduction falls away. If that case is correct, if the employer's need for his debt is so overpowering at the end, the previous deductions obviously should be variable, because the employer's needs may be very great before the termination of the employment.
There is the more general point which has been put to me by a number of people who are concerned on the ground with these problems, especially in the citizens' advice bureaux, the law centres and the like. Have the Government really taken account of the enormous power of a threat to dismiss, which would have added to it the threat of a possible total stoppage? Is that not

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an increase in the power of the employer? Losing a job is bad enough, but the threat, in addition, to take away the whole of the final wage when a worker's family faces unemployment benefit, supplementary benefit and goodness knows how many months without a job cannot be right in the circumstances of this society. It cannot be right to give such a total and uninhibited power to the employer to stop the whole thing.
I take the opportunity of saying to the Government that we have not moved an amendment of this kind, but there are many who criticise this Bill from a different point of view. There are many who criticise it from the point of view that it is time that, in matters of wages and the maintenance of wages, all our efforts should be directed towards finding some kind of formula for the minimum amount that must be allowed to someone, except in the most extraordinary circumstances; for example, conviction of very bad dishonesty or whatever.
All these percentages really mask the issue that deductions should not, especially for the low-paid worker, go beyond that which is necessary for the very minimum income maintenance. That is a possible approach and it surely has more merits than merely allowing a total deduction. We are very strongly against this matter and it seemed right that I should not merely move the last amendment, which was about a specific matter, but should deal generally with the point on the whole clause in regard to this amendment. I beg to move.
Lord Trefgarne: The noble Lord will not be surprised if I say that I regret we cannot go along with what he proposes in this amendment. The aim of the provisions is not only to ensure that workers are not left with little or no take-home pay due to deductions, but also to ensure that employers can obtain sums to which they are contractually entitled. By removing the 10 per cent. limit on deductions from the last instalment of wages, this clause enables the employer to recover all that is still owed to him by the worker on the termination of the worker's employment.
These amendments seek to ensure that the Bill prevents the employer from recovering under these provisions sums still owed to him by the worker on the termination of his employment. If the employer could only recover any outstanding debt after the termination of employment in instalments of 10 per cent. of whatever amount he paid the worker, the employer could never recover his debt, because there are no payments. The amendment would wreck the careful structure of the controls. From that point of view, I hope that the noble Lord will not want to press the amendments.
It is not true to say, as the noble Lord, Lord Wedderburn, suggested, that the employer can deduct without any limit from the final payment of wages. The justification for the final payment is of course to obtain a clean break with debts discharged. The deductions permitted from the final pay are of course still constrained by the provisions of Clause 1 which we have already discussed.
Lord Wedderburn of Charlton: I take what the Minister said. I merely add this. The very fact that one is saying that after the contract has ended where the employer takes proceedings in another court one requires that court normally to recover that amount by instalments, would suggest to me that the one thread in the Bill which is virtuous and just is that by and large it tries not to impose huge amounts of deductions, payments and requirements in judgments for this kind of reduction upon the worker otherwise than by instalments. Here on the final instalment all those controls are gone. I take on board what the Minister says. I am subsuming in my argument that the points that have gone by in Clause 1 and so on are there on the table, but, subject to that, the employer has no limit in the way that he has on other pay days. It seems to us wrong. It is a pity perhaps that we cannot challenge this more directly. It is very difficult to know how to do so. It seems to us wrong and immoral and we shall go on saying so, but at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 48 not moved. ]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 49:
Page 7, line 28, leave out ("include") and insert ("mean").
The noble Lord said: Amendment No. 49 goes to that part of Clause 4—always a clause of which we take particular note—which suddenly crops up with a definition. Is it not strange that the definition which defines a deduction, or rather, to be more accurate, inclusively explains deductions in this part of the Bill, pops up here and not in the definition clause or some other part as one would expect? But there it is. We are suddenly told that a deduction made from the wages of a worker in retail employment or a payment from him,
"on account of a cash shortage or stock deficiency",
includes references to:
"dishonesty or other conduct … which resulted in any such shortage or deficiency, or any other event in respect of which he … has any contractual liability and which so resulted".
We have moved Amendment No. 49, first, to make that a definition because inclusive explanations have a habit of very difficult interpretation. The subsection suggests that there are various other things which can apply to deductions. It does not explain the deduction fully or define it; it merely includes a few things which are to be taken account of. So for the sake of certainty we suggest that that should be a definition.
Secondly, we have moved in Amendment No. 50 to leave out lines 33 to 35 although I must say that on second look we could easily have moved to leave out some other lines as alternatives. We have debated the question of dishonesty before but here we are dealing with an explanatory definition, at any rate, of deductions and payments. They include anything in the contract—because that is in paragraph (b)—but more than is in the contract. As construed, prong one impales the worker on a contractual liability—that is subsection (6)(b)—and, prong two is:
"any dishonesty or other conduct … which resulted in any such shortage".
We are slightly puzzled about the contractual part and Amendment No. 50, to which I am also speaking, actually suggests leaving out lines 33 to 35. But more than that, there is another objectionable part of subsection (6). It has been mentioned earlier but since we are on the subsection it really must be mentioned explicitly. The final words of subsection (6) actually state that in either case in a sense it matters not whether the amount of the deduction or payment,
"is designed to reflect the exact amount of the shortage or deficiency".
One might have expected the Bill to say to the employer, "You really ought to make an effort to try to get it right". But what the Bill says,
"in each case whether the amount of the deduction or payment is designed to reflect the exact amount of the shortage or deficiency or not".
You do not have to design the deduction or payment to reflect the exact amount. Therefore, it may be that those are the three lines we should have proposed leaving out. However, we have moved the omission of the three lines that we have in a probing way to see why the Government have put in, first, this explanation instead of a definition; secondly, why the construction of (a) and (b) is as it is; and, thirdly, why the subsection says to the employer that it does not really matter whether the deduction reflects the exact amount of the shortage or deficiency.
The problems with which we are dealing are uncertain enough. We heard from my noble friend Lord Graham how the notional stock shortage on modern systems of stock control is so uncertain and how, in various other ways, there are stock deficiencies which can appear in a certain period on the computer-ised programmes and then, when other items are fed in and there is a final balancing out, it is seen that there is no deficiency; meanwhile, a deduction may have been made. Surely in all these clauses it ought to be said that the best efforts and endeavours of everyone concerned should be made to find a sum for deduction, if deduction is to be made, which reflects the amount of cash shortage or stock deficiency.
On the basis that these are probing amendments asking the Government why the subsection is worded as it is, I beg to move.
9.45 p.m.
Lord Trefgarne: I think the noble Lord has made it clear that the intention of these amendments is to make unlawful all deductions or payments in respect of shortages or stock deficiencies unless they arise as a result of a worker's dishonesty. However, they have the effect of removing all deductions or payments in these matters, other than those arising from dishonesty, from the protection of Clauses 2 and 3.
It may help the Committee if I explain the purpose of subsection (6). This subsection provides protection to workers against employers who attempt to avoid the provisions of the Bill by imposing deductions or requiring payments, perhaps of a standard amount, unrelated to the size of a cash shortage or stock deficiency on account of behaviour which results in a shortage or deficiency rather than on account of the
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shortage or deficiency itself. Protection is achieved by specifically stating that deductions and payments on account of behaviour of a worker which results in a shortage or deficiency is covered by Clauses 2 and 3, regardless of whether the amount deducted reflects the value of that shortage or deficiency. I am sure that the noble Lord would agree that we do not want to lose that protection.
However, turning to the intended effect of Amendments Nos. 49 and 50, I think there is a danger in banning all deductions or payments in respect of cash shortages or stock deficiencies unless they arise as a result of a worker's dishonesty; that is, the employers will seek to claim that all cash shortages or stock deficiencies have arisen as a result of a worker's dishonesty. It would also be undesirable to make wholly unlawful, deductions for certain other conduct such as negligence. I believe that the provisions as they stand give adequate protection to workers while enabling employers to recover amounts to which they are entitled.
I do not see that these amendments add anything except to preclude employers from recovering at all, in certain circumstances, amounts which they should be entitled to recover—for example, where negligence has led to a cash shortage. Therefore, I must resist these amendments.
Lord Campbell of Alloway: May I ask the noble Lord, Lord Wedderburn, why it is that in Amendment No. 50 he wants to excise the words,
"any other event in respect of which he (whether together with any other workers or not) has any contractual liability"?
Is this a sort of shade of the concept that the contract of employment is totally immaterial, which we had on Clause 1? What is the object? Is there any sanctity of contract in employment law or is there not? What is the object of it? Perhaps the noble Lord can assist on this point.
Lord Wedderburn of Charlton: I thank the noble Lord, Lord Campbell of Alloway, for his question. In a sense, to answer it fully would mean covering a lot of the ground that we have covered before and after dinner; but of course the short reply is that sancitity of contract for someone who has no bargaining power means something rather different than sanctity of contract means for someone who has a lot of bargaining power. The noble Lord will know this very well because at the time he was involved with the Unfair Contract Terms Act of 1977 (and I guess he would have supported it) which was based on that very concept.
Though we have not debated it on this occasion it may be that, in the light of what is said tonight, we shall want to come back at Report stage to that very Act, though it seemed to us to be wrong to include it in tonight's discussions until we were clear about a number of other matters. Sanctity of contract is something which one can understand in law, but in real life one has to look at the contract that is made. Most of the workers whom we have been discussing most of this afternoon and evening are not in the position of bargaining about their terms. They have

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terms imposed upon them. These are contracts of adhesion which reflect no consent in terms of choice. When, on top of that, there are 3.3 million persons unemployed, then there is even less choice.
So a contract must be looked at in the context of real life, and I have every confidence that the noble Lord will do so. As I explained, we propose the excision of these lines partly to try to limit the concept of deduction to that of dishonesty and other misconduct, as the noble Lord the Minister suggested. I appreciate that there are difficulties in terms of the protection of workers as regards those amendments actually being carried on the face of the Bill. I said that they were
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probing amendments and I take on board what the noble Lord the Minister has said. I do not think he replied on the question of the final lines, and indeed he had every right not to do so because I think I forgot to say that I was speaking to Amendment No. 51 as well, in order to make progress. I shall revoke any right to recover that ground by not moving that amendment, but we leave it on record that we wonder whether those final words are in exactly the right form. With those remarks I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 50 to 52 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 53:
Page 7, line 38, at end insert—
(" ( ) It shall not be lawful for an employer to make any deduction from payments to a worker employed by him which are not wages, whether by virtue of section 7(2) or otherwise, on account of any cash shortage or stock deficiency".).
The noble Lord said: Amendment No. 53 is moved at this point although those who constructed the Bill and know it intimately and have lived with it longer than I have may say that it should come at a different point. However that may be, it raises the following question. The Bill deals on its face with deductions from wages. All that we have been discussing deals with deductions from wages, but we only come to this, of course, when we have reached the definition of wages in Clause 7.
If I may advert to it briefly, Clause 7 first includes a number of matters within wages and then refers to a number of payments which are not within wages. I shall not go further than that, but those payments include advances for a loan, advances of wages, payments in respect of expenses, payments by way of pension allowance or gratuity, and so on. There is a wide variety of payments and they are not meant to be comprehensive.
It seemed to us that there ought to be no possibility of the worker suffering deduction in respect of cash shortage or stock deficiency, at any rate within the area of retail employment. I apprehend that the amendment as drafted does not in fact confine itself to that area, but we felt that at any rate within that area generally there should be no possibility of any employer—no doubt it would be a very bad employer and no doubt a minority employer but nevertheless a possible employer—making deductions for stock deficiency or cash shortage from other payments. We take that to be the intention of the Bill. The Bill would be nonsense if that were not so. If the Minister can show us where that is clearly included in the Bill, we shall be happy. We think that it is not.
As I say, the Bill is founded upon control—"control" is perhaps rather a large word—or at any rate some conditions for deductions from wages in Clause 1, except for the matters set out in subsection (5); a special control on retail employment in Clauses 2 and 3; and the matters that we have mentioned in Clause 4 in regard to final payment. What are to come are remedial matters, definitions and so on. It does not seem to us that there is anywhere stated clearly enough a prohibition on deductions from payments other than wages. Plainly it could be an extremely serious matter.
A rogue employer who did not like the Government's decision and who said "I hold no truck with this 10 per cent. I shall take the 10 per cent. from the wages, but in regard to those other expenses that were to be paid, that other pension payment that was to be paid or that other advance that was to be made, I shall take some of the rest from that". If that were allowed in any form, it would not be within the spirit of the Bill, even as it is drafted now, without any amendment whatever. On that basis, I beg to move.
Lord Trefgarne: As the noble Lord explained, this amendment prohibits deductions on account of cash shortages and stock deficiencies from sums which are not wages. This Bill is called the Wages Bill and gives protection against deductions from wages. We have to define the meaning of wages, not least because the employer has to know what are wages to establish the size of the 10 per cent. limit. In defining wages we have been concerned to exclude sums that might artificially inflate the 10 per cent. figure, such as a loan, and sums that are not commonly thought of as wages, such as a pension or payment of expenses.
As regards payments which are not wages, if employers fail to honour commitments to make such payments or make deductions from such payments in breach of contract, the remedy of the worker is to the ordinary courts for breach of contract. We do not want to ask industrial tribunals, for example, to decide whether an obligation to pay a pension has been properly discharged. The Bill concerns wages and it should not seek to deal with payments that are not wages. I hope that the noble Lord will agree with that proposition.
10 p.m.
Lord Wedderburn of Charlton: I certainly do not, and I should be very surprised if most of the other Members of the Committee did, especially if we take account, for example, of the cases that have been cited in the Committee today. As it is after dinner, we are perhaps getting a little too far away from the fact that many garage chains operate the most dreadful practices against young employees who come on an afternoon's training to work in petrol stations. There may not be so many cases, but that is matched by examples given from all over the country of workers who suffer such deductions in shops and in other places, including transport workers if they are unfortunate enough not to be properly protected by the TGWU.
I understand what the Minister says. He faces, as indeed does anyone who approaches this matter, the difficult question of what wages are. I have tried to be fair to the Bill. It makes a stab, at least in Clause 7, at describing those things that are within wages and the things that are without. We have already seen that wages may be calculated by reference to reductions before we even get to the question of deductions and payments. We saw that on a previous amendment.
Then we face the issue of whether the Bill is to allow an employer to go round the Bill where there are further payments to be made to the worker which are not wages and make deductions from them for the reasons which are so carefully protected in the Bill to 10 per cent. until the end of the employment.
The Minister says two things about that, He says that there will be a remedy for breach of contract, if it is a breach of any contract. We come back to the point again and again that that is no problem for the garage proprietors who do the type of things that have been explained to the Committee. They will make a contract that includes that provision. They will have a clause which says, "We shall deduct for cash shortages

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up to 10 per cent. except on final instalments for cash shortages, etc." Then there will be Clause 7, and certain payments will be made in a different way. I can think of how to begin on that clause. It may get by the first limb up to the Court of Appeal. It may even pass the noble and learned Lord, Lord Denning, if we manage to get him back to the Court of Appeal. One can see ways in which the clause could easily be drafted.
It will not do for the Minister to say wages is wages and this is a wages Bill. What he says three times wages are, is not necessarily right. There will be other payments. Deductions will come from them.
Why invite evasion of one's Bill if one believes in it, by rejecting on principle an amendment of this kind? I can see that one might say, "You have not given us a good enough definition" or "We want some further consideration of what kind of expenses and payments we should have to look at." To say that we cannot have the industrial tribunals looking at pensions, as though that were an answer to what is so obviously an evasion of the entire mechanism carefully put forward —I have to say this straightforwardly—suggests that the Government are not serious about the limits contained in the Bill. They do not care that much about the 10 per cent. and they are not really concerned with taking away an amendment which would cause them to look at the obvious way in which one could consider evading the Bill.
Consideration has already been given in a number of places on how to avoid the 10 per cent. The Minister must know that people who advise others in their professional capacity are already looking at the Bill. He suggests that I have not been fortunate enough to gain an insight into the practices of such parties. Were I to do other than hear about it at secondhand, I have no doubt it would be interesting. This is not the matter to which some people have been looking but of course they are looking for ways to get round the provision on the grounds that the Minister gives. The people who will evade the Bill will give the same reasons that the Government give for refusing to accept so many amendments. They are saying, "This is a terrible burden on business. It is a terrible way to tie the hands of the employer to say that he cannot take more than 10 per cent." They believe that. They are looking at ways around the provision.
This is a small amendment, and I should have hoped that the Minister would have looked at it. It is only a small amendment, but it matters. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Clause 5 [Complaints to industrial tribunals in respect of unauthorised deductions etc.]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 54:
Page 8, line 10, after ("him") insert ("whether or not").
The noble Lord said: I shall move this amendment briefly and speak also to Amendments Nos. 55 and 57 which go to the same point. I have little more than a
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fairly simple question for the Minister. The issue relates to complaints with regard to payments. The worker is complaining about the payments demanded. Wherever that problem arises, it seems to us that the Bill speaks of him being allowed to complain about demands for payments made in accordance with Clause 3. Does that mean that if the employer makes a demand that is not in pursuance of, or in accordance with, Clause 3, there is no right to complain? That cannot be the intention of the Bill. It is a matter of wording. To put it the other way round, the employee or the worker surely has the right to complain about any type of demand for payment that offends the previous clause of the Bill, whether or not purportedly made in pursuance of Clause 3. If that is so, we are happy. If it is not so, we are not happy. I beg to move.
Lord Trefgarne: Clause 5 establishes procedures for workers to present complaints to industrial tribunals in respect of deductions from wages or receipt of payments that contravene the provisions of Clauses 1 to 3. Subsection (1) sets out the four grounds on which a worker can present a complaint to an industrial tribunal. The amendments seek to change subsection (1) (d) that enables a worker to present a complaint on the grounds that his employer has received a payment in respect of a cash shortage or stock deficiency that is in excess of the 10 per cent. limit set by Clause 3 (4). They seek to ensure that a worker has a right to complain on that ground whether or not the other requirements of Clause 3 concerning demand for payment and its timing have been satisfied.
I can understand the noble Lord's concern. I can assure him that subsection (1) (b) will cover occasions when an employer has failed to satisfy the provisions of Clause 3(1) giving a worker a right of complaint under that subsection in those circumstances. That means that these amendments are unnecessary. I hope that these observations will reassure the noble Lord.
Lord Wedderburn of Charlton: Left with the mere words of the Bill I would still be worried. I have, however, the assurance of the noble Lord the Minister. I can therefore more happily beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 55 to 57 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 58:
Page 9, line 7, at end insert ("and
(c) in any case, the tribunal may also make an award of compensation to the worker of such amount as the tribunal considers just and equitable and in all the circumstances having regard to any loss or detriment suffered by the worker and to the infringement of the workers' rights by reason of the failure of the employer to observe the requirements of this Part."
The noble Lord said: We now come to something rather serious. The Bill limits compensation to a worker in the sum of the unlawful deduction. In deduction I include unlawful payment. This is a worker who is at risk, who is highly vulnerable to dismissal, who probably does not have two years or,

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where he or she is a worker with short hours, the five years required before he or she can go to an industrial tribunal to complain of unfair dismissal. Certainly, if still in the employment, then that person is very courageous to go near the tribunal at all. Yet that person does and complains. He says that the employer, despite all the great powers in the Bill, got it wrong and kept the money from him and his family illegally, like the £50 deduction from the lorry driver whom we mentioned earlier this afternoon.
If the worker is lucky he will receive help from a trade union official, a law centre or a citizens' advice bureau, and eventually he will reach the tribunal. First, there will be the pre-hearing assessment and then he will be warned that he may not have a case. Then there is the conciliation session, and eventually, 12 or however many weeks later, he will reach the tribunal. At the hearing the worker may win. All this time the employer has retained the money. The worker's family debts have not been met by that amount at any rate, and life has been that much harder. I cannot emphasise too strongly how serious that is in regard to this Bill. The amounts that we are talking about would perhaps be chickenfeed to many Members of the Committee, but they are a very serious percentage for the families concerned.
Having reached the point, what do the Government say can be recovered? This is why we wish to insert an amendment at page 9, line 7. Basically, what is allowed is that the tribunal can pay to the worker the amount of the deduction or the payment illegally required, or it can order the employer to repay the worker the amount recovered or received in excess of any such limit, as was mentioned earlier in the Bill. That is not the normal measure of compensation in our employment protection law.
If we look at Section 26 of the Employment Protection (Consolidation) Act 1978, which is perhaps an analogous type of case, where you have a complaint of action short of dismissal which turns out to be wrongful, what does the statute say? In Section 26 we are told that:
"The amount of the compensation awarded by a tribunal on a complaint under section 24 shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the infringement of the complainant's right under section 23 by the employer's action complained of and to any loss sustained by the complainant which is attributable to that action."
We say that surely a parallel should be drawn here. Our amendment says that, in addition to the amount of the deduction or the payment which is illegal, the tribunal shall have a discretion—and we use the normal phrase in employment protection legislation—that the tribunal may also:
"make an award of compensation to the worker of such amount as the tribunal considers just and equitable in all the circumstances having regard to any loss or detriment suffered by the worker and to the infringement of the workers' rights by reason of the failure of the employer to observe the requirements of this Part".
Members of the Committee will notice that we have used the formula of Section 26 of the 1978 Act and indeed of certain other parts of our legislation because it has been acknowledged that that is not in the proper sense a penal provision. There are penal provisions elsewhere in the legislation, but they are not here. That is simply a recognition that a sum can be added because of the infringement of the worker's right.
However, much more serious than that is the question which I put to the Minister: surely when the employer has been in possession and the worker out of possession of the money, however much or however little, for the whole period since the deduction to up the tribunal's judgment (which is not likely to be less than three months and probably, in some cases, will be more), any loss suffered by reason of the lack of that money should also be measured in the compensation which can be awarded in accordance with what the tribunal thinks is just and equitable. I do not say that we should lay down any absolute rule. It is not normal to lay down an absolute rule in our legislation on matters of this kind. But is it normal to treat this as a debt when the employer has illegally possessed himself of the money—despite the ease with which he can lawfully do so under the Bill, as we see it—and to lay down that that shall be the full measure of compensation in every type of case?
Where illness in the family was made worse by lack of the money, is that enough? Where there has been some family problem because of the lack of the money, is that enough? We say that it is not, and we say that loss or detriment which the tribunal regards as just and equitable must be put into this Bill as something that the tribunal, where a worker proves his or her case in the end, at least has the jurisdiction to award. I beg to move.
10. 15 p.m.
Lord Rochester: At Second Reading of the Bill I said that it was questionable whether compensation to the employee should be limited to the deduction from his wages made by the employer, or on the other hand extended to cover loss of pay for time taken off work in preparing for the hearing of the case, attending the tribunal itself, and recovering expenses for travelling less than the distance of six miles, for which allowance may, as I understand it, presently be made. In this amendment the noble Lord, Lord Wedderburn, has instanced some other losses that the employee might sustain.
Having thought a little more about this since Second Reading, and having heard what the noble Lord, Lord Wedderburn, has had to say this evening. I incline to the view expressed in this amendment that the tribunal should be able to make an award which is just and equitable having regard to the total loss suffered by the employee. I hope therefore that the noble Lord the Minister will be able to make a positive response to this amendment.
Lord Trefgarne: Under the Bill, where a worker successfully complains to a tribunal about an unlawful deduction (or payment) the tribunal will order the employer to repay the sum of money in dispute to the worker. The amendment would give tribunals discretion to make an assessment of loss, detriment or infringement of rights suffered by the worker and to make an award of compensation. However, I believe that the most important outcome of tribunal proceedings must surely be to ensure that the worker gets the actual sum of money due to him. This is achieved by the provisions in their present form.
The procedures for settling complaints at tribunals are swift and simple, with most complaints being

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sorted out within three months of the complaint being made. Because the procedures will be quick the costs to the worker (such as interest on the sum not paid) will be small. Given that fact, we have to judge whether there should be a provision for compensation with all the difficulties that this will bring.
Aside from the practical difficulty for a tribunal in making the assessment, the introduction of compensation provisions would add a further complexity to tribunal procedures which is simply unnecessary in this context. We are determined to keep tribunal procedures as simple as possible. It is in fact hard to see what loss the worker can suffer other than the deduction itself and the inconvenience of bringing a complaint. There are, however, no tribunal jurisdictions which permit tribunals to award compensation for the inconvenience of bringing a complaint, and I am sure that this Bill is not the place to consider that question. I hope that the noble Lord will not press his amendment.
Lord Wedderburn of Charlton: I thank the Minister for his reply, but of many unsatisfactory replies that is about the most unsatisfactory. It does not come to grips with the problem. Tribunal proceedings may seem swift and simple to the noble Lord the Minister and maybe to myself if they get going and are finished within three months, but three months is a long time in a low-pay household. If the employer in retail employment has stopped a number of weeks' wages completely and the employee is lucky enough somehow to be continuing in the employment or somehow is able to bring an action in the tribunal, the suggestion is that there will not be any further consequential losses other than mere inconvenience. "Inconvenience" is rather a nice term—I had not thought of it—for being done out of your wages, for having the lot stopped for "shorts". The family will have to borrow money, and the interest is likely to be high. They will have to pawn things. They will have to get by. That is not an inconvenience: where someone has done this by reason of an unlawful stoppage, is an outrage. You should have the right to compensation for the loss you suffer.
We have not couched the amendment in some penal and punitive terms. The noble Lord the Minister makes me think that perhaps we are wrong to agree that it should be an end to criminal proceedings; I begin to wonder. Once you get into civil proceedings you have this sort of argument put to you—that all you have is a debt due and you cannot recover any more. What kind of incentive is that to the rogue employer to do his duty even under the contract? There is here absolutely no legal incentive. Nor is it true to say—I do not think this is exactly what the Minister said—that the industrial tribunals do not deal in this sort of matter. The Minister said that they do not give compensation for inconvenience. That is a proposition at which I should wish to look further with notice in regard to some elements of unfair dismissal compensation. It may be right, but we are not talking about that.
For the Government not to consider the right of workers in this circumstance to recover, where it is just and equitable, a sum in respect of loss caused to them
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and their family by illegal stoppages seems to me to show a thread of cynicism which hitherto at least had been concealed.
Lord Teviot: The noble Lord, Lord Wedderburn, is quite right and my noble friend is quite right, but I am afraid the argument has been terribly narrow. I have sat here listening to every word. Please may I ask a question? The worker has had deductions from his wages for several weeks, and I should like my noble friend to elaborate on this. Could it be as much as that? While he waits for his tribunal presumably he will be paid his wages. I know that there will be hideous inconvenience, but we have had no examples of this. When we read Hansard tomorrow morning there will be no colour in this debate at all. Can somebody give a few more examples of how this could happen? Are several wages likely to be deducted? How much privation will there be and how much will be suffered? Before we go for this I think we should hear a little more.
Lord Wedderburn of Charlton: The noble Lord and I will look with interest at Hansard for the earlier part of this afternoon. I am sure that we shall read of many examples given by my noble friends and myself which we found in the documents of the Citizens' Advice Bureaux. Bureau after bureau wrote in, and still write in, to the national body, giving examples of deductions from workers of various kinds, from lorry drivers to shopworkers. In particular, in the last three to four years there has been a spate of horrendous deductions from petrol station workers. If the noble Lord cannot find those cases, I shall be happy to send him copies of the details I have. There has been no challenge today regarding the Sealands garage case which went to the Divisional Court and the reaction to it. One does not doubt that these deductions are taking place at an increasing rate.
I understood the noble Lord to be saying: "Will they continue under this Bill when it is an Act?" One of the planks on which we find ourselves is that this Bill is so inadequate that there is no reason whatever to think that they will not continue; because all the circumstances which this Bill demands of the employer by which he may legitimately make a deduction which at the moment he may not legitimately make and which at the moment is a crime, are frequently satisfied. Many of the so-called, in law, contracts of the petrol station attendants are there and they would satisfy this Bill. What they are not satisfying at the moment is the requirement of the Truck Act 1896 that the deductions be fair and reasonable.
That links with the amendment I moved. The amendment says that having not been able to persuade the Government of the most elementary justice, as we see it, in regard to deductions, they should be not more than is reasonable or they should not apply over certain areas which the amendments have covered. Having traversed that ground and failed, we say to the Government, "Very well, we think that your conditions are inadequate. You say they are enough." But where the employer breaks them and where the tribunal says that the worker has suffered loss in consequence of the deductions over and beyond the

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nominal amount of the so-called debt due to the employer—which may well be a case where weeks have been stopped (there are at the moment many examples of that which do not happen to meet the conditions of the Bill)—in that case surely there must be some power and jurisdiction.
What the Government are doing is depriving the tribunal of jurisdiction to do what in good conscience it would wish to do as an ordinary body of industrial jurisdiction, as it is so often called—giving the worker not merely the amount which has been illegally detained by the employer, possibly over a long period, but also paying something. It will not be much, but it will mean a lot in terms of the loss which the family concerned may have suffered. The Government will not give the tribunal that jurisdiction. That is the issue between us.
Lord Teviot: I am grateful to the noble Lord for saying all that. I have done a bit of listening but there have been gaps and I shall do quite a lot of reading. There is one question that I should like to ask my noble friend. Will the worker, he or she, while waiting between then and the tribunal be gainfully employed by his or her employer? There will not be dismissal or suspension without pay?
Lord Trefgarne: If my noble friend will allow me to say so, that is very much a different question. But one of the features of this Bill is that very considerable constraints are imposed on the employer on the amount of deduction and the purpose of the deduction that he can make. This has been a matter which the noble Lord, Lord Wedderburn, and the noble Lord, Lord McCarthy, and others and I have been discussing the whole afternoon, if I may say so; so that I believe that my noble friend can sleep easy.
Lord Wedderburn of Charlton: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6 [Supplementary provisions relating to complaints]:
10.30 p.m.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 59:
Page 10, line 7, after ("of) insert ("any provision of this Act").
The noble Lord said: It is necessary to move this amendment because there is something very funny going on at page 10, line 7. As we have got the noble Lord the Secretary of State with us now, we can be sure that we can get the right answer and we are very glad about that.
It is a legal point, so I shall put it very briefly because there is never really any problem about legal points. The real problem is that Clause 6(3) is not in the usual form. There is a usual form for these things and it is rather astonishing to find this Government not following the usual form. In Bills of the employment protection kind—and in a way I suppose that this is
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nominally so—you usually find that there is a clause which says that any provision in an agreement is void if it excludes or limits the operation of the Act or if it precludes a person from presenting complaints under the Act to a tribunal.
So there are two prongs. You cannot allow people to contract out of your Act and you must not allow them to put limitations on a person's rights to go to an industrial tribunal under the Act. That is the form, for example, of Section 140 of the Employment Protection (Consolidation) Act 1978, and it is matched in other statutes and has been for some time.
Of the two prongs, the second is effectively covered: that is to say, that in Clause 6(3) it is provided that agreements shall be void which limit or exclude the operation of Section 5 or preclude any person presenting a complaint under Section 5. That is the complaints section. In other words, you must not stop the worker going to the tribunal, although, as we have just seen, on the Government's view, what he can get is pretty limited. But where is the other prong? Where is the provision that says "You must not contract out of this Act"?
This is a curious matter, because in a way I suppose the Government might have been advised, "You don't need that because this Act depends on contract anyway and so for anyone making a contract to deal with the matters concerned with this Act, that's all right." That is all right for Clause 1, but it will not work for Clauses 2 and 3. Surely there must be a general provision which ties up the ends of preventing anyone attempting to make any type of agreement anywhere on any point to contract out of the mandatory provisions of this Act. If the Government say that all those loose ends are tied up internally and that their Bill is like a bundle of spaghetti instead of a neatly-tied parcel, then all I can say is that it would be very much better to have followed previous form and tied up the parcel properly by putting in the proper clause.
The serious point of course is that when the courts meet that clause they are bound to take notice of the fact—and I do mean "bound"—and they must say "This clause is different from Section 140, and so it must mean something different. And so we approach this Act with the expectation that unless it is made abundantly clear, you can contract out of things, or at least it is left rather wide open whether you can." That cannot be right. It would mean that the employer could induce a worker to contract out of certain provisions like Clauses 2 and 3. That cannot be the intention of the Government. There must be something more to it. On that basis, and in hushed expectation of the Minister's reply, I beg to move.
Lord Trefgarne: I am pretty sure that this Bill does not have the defect which the noble Lord suggests. However, I recognise that there may be more than one respectable view about that. Thus, if the noble Lord is willing to withdraw his amendment, I shall undertake to see that this matter is carefully examined between now and the next stage, and we shall come forward with an amendment, if that is thought appropriate.
Lord Wedderburn of Charlton: At no point of our proceedings in Committee have I begged leave to

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withdraw an amendment with more alacrity. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
Lord McCarthy Lord McCarthy moved Amendment No. 60:
After Clause 6, insert the following new clause:
("Unfair dismissal

.—(1) The dismissal of an employee shall be regarded as unfair for the purposes of Part V of the 1978 Act if the reason (or if more than one, the principal reason) for it is that the employee has brought, or proposes to bring, a complaint under this Part of this Act.

(2) Section 64(1)(a) of the 1978 Act (qualifying period) shall not apply to a dismissal to which subsection (1) above applies.

(3) In section 71(2)(b) of the 1978 Act there shall be inserted after the words ("section 58 or 59(a)"), the words ("or by virtue of section 10A of the Wages Act 1968").

(4) An employee shall have the right not to have action (short of dismissal) taken against him as an individual by his employer for the purpose of preventing or deterring him from making, or proposing to make, a complaint under this Part of the Act.

(5) Sections 24 to 26 of the 1978 Act shall apply to action which contravenes subsection (4) above as they apply to section 23 of that Act.").

The noble Lord said: In rising to move this amendment in the names of my noble friends and myself, I, too, should like to welcome the Secretary of State to his place at this somewhat late stage in our proceedings. I should say that I would welcome him still more if he is there on Thursday, when we come to discuss Part II of the Bill, which I know he is so keen about. That is not to say of course that he need worry about the handling of the Bill so far by his noble friend the Minister. He has given very little away; and I should not like him to think that the very little that he gave away just now is typical of what he has been doing all day.
However, we come now to an amendment which builds on a precedent which was begun by this Government—one which the Government began with an amendment which they moved to the Shops Bill and which we sought to extend and develop by an amendment moved to the Sex Discrimination Act—that is to say, to create a special, additional, specific category of unfair dismissal right, where a Bill makes changes and introduces new laws which put employees in a position of some risk. This is a precedent which, as I say, has been accepted by the House and by the Government, and it is one which we want to extend in the case of this Bill.
The object of this amendment is to create a right of compensation for unfair dismissal or action short of dismissal. There should be a right of compensation where a worker is dismissed for seeking to bring a complaint under Part I of the Bill—for example, if some deduction is made which is not covered by contract, or if some deduction is made in respect of retailers at a rate which is not laid down in the Bill—irrespective (and this is very important from the point of view of the kind of workers who are covered by this Bill) of the present qualifying period of two years, in the case of full-time workers, and five years in the case of part-time workers who work for less than 16 hours. We want—and our amendment would ensure—the right of unfair dismissal protection to apply irrespective of any qualifying period. The reason
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for that is that, as we have been saying all afternoon, this Bill is particularly likely to affect those workers who have very little service, who may be part-time, who may have much too short a qualifying period to be covered by the present legislation. That is what we are trying to do in this Bill.
I want to make two very brief points about why we believe that such an amendment is required and, first, why we believe that it is likely that it will be needed as a result of action by employers. Here I would say to the Minister, who has been answering questions all afternoon, that we are trying to say something about the contemporary situation. He accused us a little while ago of thinking about things as they happened centuries ago. What we are talking about is ordinary workers on ordinary gas stations, in ordinary shops, in ordinary work, being ordinarily sacked by ordinary employers, none of which is confined to centuries ago.
Why should we need a Bill to prevent all employers from doing this? It is because we do not believe, as the Minister appeared to believe earlier today, that in respect of issues of this kind everything should be left to the parties. I must tell the Secretary of State that the argument that everything should be left to the parties is one that we have had all afternoon. As he knows, we have been told "Leave it to the parties", because in this Bill we are talking very largely about unorganised parties. Once the workers get organised, we are not told by this Government, "Leave it to the parties." We are told, "Leave it to the law." But while the workers are unorganised, we are told, "Leave it to the parties."
We are saying that you cannot leave this to the parties, and we are saying that the Government themselves say, and admit, that there is a precedent whereby there should be legal regulation. We have had quite a lot of discussion today of the kind of situation in which this kind of legal provision is necessary. We have been told about garage owners; we have been told about deductions. Even with this Bill, some of those deductions might not be covered by the contract, and a worker might take an employer to an industrial tribunal and win because they were not covered by the contract. Then the employer might very well decide either to dismiss him, or bring about a form of constructive dismissal, which is rather more likely in those circumstances.
We were told this afternoon, for example, about a lorry driver who had had deducted some lodging allowance which was in excess of that specified in the contract, or which he believed was in excess of that specified in the contract, or had had some deduction made, as many lorry drivers have had, because the employer had had to pay an excess insurance premium. In those circumstances, the lorry driver might go to the tribunal, which might uphold the employer, because as long as it is in the contract there is not much that the worker can do. Nevertheless, the employer might say, "My position was validated. My position was upheld. Basically, this individual had no right to take me to the tribunal and"—as the noble Lord the Minister frequently tells us—"waste my time in this way", and therefore either by dismissal or by-action short of dismissal or by constructive dismissal seek to rid himself of this troublesome worker. We are saying that in those circumstances there ought to be a right of unfair dismissal.
What is the defence which the Minister might make? I always try to imagine what is in the mind of Ministers opposite; I do not always succeed.
Lord Trefgarne: If the noble Lord will give me a chance, I shall tell him.
Lord McCarthy: I know what the Minister has in front of him, but he could always change it if I say it; but I shall say it all the same. He might say, "Well, it is all there in the 1978 Act. Why do we need a provision of this kind? After all, there is in the 1978 Act a provision which relates fairness or unfairness to conduct. Is this not conduct? Would not any decent tribunal say that you cannot dismiss someone for conduct of this kind?" Or if conduct does not fit, he might say, what about "some other substantial reason", which is there in the 1978 Act. Would that not cover it? "Surely no tribunal" he might say "would uphold such cases if it could get them by covering it with "some other substantial reason".
My answer to that is that we do not know precisely what a tribunal would say; and when the Government—any government; the previous government or this Government—want to mark something out as being unfair, as wanting certain types of conduct to be covered, as they did in the Shops Bill and as they have done in many other cases, they introduce a specific, prescribed, defined category of unfair dismissal. This is what this Government have done and indeed what previous governments have done in respect of workers who are dismissed because they refuse to join a union or are dismissed because they have joined a union. We do not say in that case, "Let the tribunals sort it out; some other substantial reason. It is an aspect of conduct".
We say this is an important issue. We specify that when he who joins a union is dismissed or when he who refuses to join a union is dismissed, he has a particular prescribed category of unfair dismissal; or if a woman becomes pregnant we specify under the legislation that dismissal on grounds of pregnancy is unfair dismissal; or if strike activity is involved, the circumstances in which people can be dismissed for being involved in strike activity are prescribed in the legislation. We prescribed in the legislation for unfair dismissal on sexist grounds, on racial grounds. We do not rely on "catch-alls" of the 1975 Act if in fact we believe that such a dismissal is essentially unfair. And of course in some of those cases—for example, in the case of refusing to join a union or being dismissed on grounds of trade union membership or on sexist grounds or on racial grounds—we do not insist on the qualification rules. That is what we are saying here.
We are saying that in this area this is a category of unfair dismissal which the Government should accept, which is too important and too significant to be left to the chance of individual tribunals working it in under one or another of their general criteria; that the Government should telegraph to employers, should demonstrate to employers, by putting it in the Bill that they would be against pressure of this kind. That is the case for the amendment. I beg to move.
Lord Rochester: At this time of night I shall use only a few words. I should not like the Secretary of State to
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feel that the welcome already extended to him by Members of the Labour Front Bench is not supported by me. I am equally glad to see him.
As regards the substance of this amendment, perhaps I may say that I am sympathetic to it. Many of the people we are here considering are low paid. They are largely unorganised and therefore unprotected by trade unions. They work in occupations in which there will be a high labour turnover and, as the noble Lord, Lord McCarthy, has already said, they will be either full-time workers who will have been employed for fewer than two years, or part-time workers working fewer than 16 hours a week who have been employed for less than five years. It does seem that there is a case for some special further protection against unfair dismissal of the kind proposed in the amendment. That suggestion carries weight and I therefore hope that the Minister will be able to respond constructively.
10.45 p.m.
Lord Trefgarne: The effect of this new clause would be that workers, irrespective of age, length of service or hours or work, would have new rights to complain to an industrial tribunal either on the gounds that they had been dismissed or that action short of dismissal had been taken against them for bringing complaints under the provisions of Part I of the Bill.
This new clause would apply some of the special compensation provisions which apply to dismissal, and action short of dismissal related to trade union membership, to dismissal for making a complaint under Part I of the Bill. However, the provisions of the Wages Bill do not concern fundamental rights such as those I have just mentioned or the right not to be discriminated against on the grounds of race or sex.
Part I of the Bill gives added protection to workers and provides a cheaper and simpler avenue of complaint about unlawful deductions from wages. We consider that right and proper. However, we do not consider that there is a need to go further. The new clause needs to be viewed in the light of the other protections conferred by the 1978 Act. In general, a worker has to work for two years for an employer before he acquires the right to make a complaint of unfair dismissal. As a matter of general policy we think that this strikes the right balance between the legitimate interests of workers and the burden that the legislation places on employers. We do not believe that there is any justification for special provisions of the sort advocated by the noble Lord. I hope, therefore, that he will not press the amendment.
Lord Wedderburn of Charlton: Before the noble Lord leaves that point may I ask this question? If the two years is about the right balance, and since we are dealing with so very many workers who work less than 16 hours and who therefore would have to serve five years before they had the right to approach the tribunal, does not the Minister consider that on the basis of his own arguments some special provision should be made?
Lord Trefgarne: I should have to take advice on that question. I cannot answer the noble Lord without doing so, but I certainly undertake to do that.
Lord McCarthy: May I develop that point because it is an interesting one? As far I understand the noble Lord, he is saying three things, and if I get it wrong I ask him not to say so now but to go away and think about it.
First, he is saying that he does not like the special compensation provision which we would introduce in subsection (3). I see his point although I do not agree with him. He thinks that special compensation is only there for non-unionists or workers who are sacked on the ground of trade unionism. Well, we could change the amendment or bring it back on Report or the noble Lord could introduce an amendment which is similar to our amendment but which does not make the special compensation provisions. That is a possibility.
Secondly, the noble Lord says that he does not like the two-year rule to be set aside. Once again, I take his point. He is saying that exemption from the two-year rule is only for non-unionists, or that it is only for sex or race but not for these people. That is the noble Lord's position and we have to put up with it. But suppose we were to come back and say that we will take out the special compensation and take out the two-year rule from the amendment, what would his attitude be to that? I ask that because I thought that the third point he made was that he was in favour of special provision and that he did not want to leave this to chance. That is the real cutting edge of what we are saying—that he did not want to leave it to the chance that industrial tribunals might or might not get it in under, for example, some other substantial reason—because they might not. Therefore, if we could meet him on special compensation and meet him on the two-year rule, then he might meet us on the idea of making special provision for this particular case. Is that what he is telling me?
Lord Trefgarne: I replied to the amendment which appears on the Marshalled List. If the noble Lord, having heard the shortcomings of that amendment, wishes to table another one at a later stage, I shall consider that too.
Lord McCarthy: In those circumstances and in the hope of a better morrow, I shall withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 [Meaning of "wages"]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton had given notice of his intention to move Amendment No. 61:
Page 10, line 14, leave out ("by his employer").
The noble Lord said: It is our intention not to move Amendments Nos. 61, 62 and 63, but it would seem courteous to say why in a sentence.
In the light of the previous discussions in Committee, it seemed to us that the problems relating to the concept of wages—which is a doubly ambivalent concept in the Bill: that is, it is a concept to which that which is permitted is related and a concept to which that which is controlled is related—as against the problem of evasion by way of deductions from non-wage payments, is rather more complex than we had
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realised. We are confident that it is more complex than the Government have realised. Therefore, if the Committee will allow it, we do not wish to move the amendments on the Marshalled List but would like to consider the matter further at a later stage.
[Amendment No. 61 not moved.]
[Amendments Nos. 62 and 63 not moved.]
Clause 7 agreed to.
Clause 8 [General interpretation of Part I]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 64:
Page 12, line 6, leave out from ("contract") to end of line 9 and insert ("who is not a professional client of his").
The noble Lord said: I beg to move Amendment No. 64 and for convenience I shall speak also to Amendment No. 65. These amendments relate to the definition of the persons covered by the Bill. The workers who are covered by the Bill are substantially persons who work or worked under one of the contracts referred to in Clause 8(2). It is to that subsection that our amendments are directed.
It is right that the subsection should be very wide. The contracts to which our amendments are directed are three in number: contracts of service, contracts of apprenticeship and other contracts for work or services. Everybody knows how difficult it is to define a contract of service, and the reason is that the fragmentation of the labour market into various kinds of atypical relationships, as we used to see them, has put such pressure on the legal concept of "the employee" or "the contract of service" that a defini-tion is difficult to achieve. Since there are so few apprentices—indeed the number has been falling for many years now—the third category becomes more important than it otherwise would have been in analysis, because of the social facts of the situation.
Under this third heading the term "worker" was previously given a well-known description. In the 1974 Trade Union and Labour Relations Act a "worker" was described as "a person who works …
"under any other contract [than a contract of employment] … whereby he undertakes to do or perform personally any work or services for another party to the contract who is not a professional client of his".
It is from that formula, which has been used elsewhere, that this Bill departs. In this Bill we have a contract for individual performance of:
"work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual".
In moving, as it were, the traditional formula in place of the new formula, we are asking certain questions of the Government. There are some ways in which, as I read it, this new formula could be narrower and some ways in which it might be wider than the old one. But it seems to me to be rather uncertain. Does it do anything to help, for example, with regard to home workers? It certainly cannot do so if there is held to be no contract, as is sometimes the case. Home workers, of course, play a part in Part II of the Bill, but are not specifically referred to in Part I. Would a home worker be carrying on a business, and would the employer

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then become the customer, so that the home worker would be excluded under paragraph (c)? It is not at all clear to us exactly in what way the new formula improves for the purpose of this Bill upon the old formula of the party who is not a professional client; by "improves" I mean includes more workers within the scope of the Bill.
Amendment No. 65 adds a further dimension to the same argument or set of questions. It is directed to the situation where the worker's only contract is with someone who is not an employer as far as he is concerned. It may be someone who provides him or her to work for a client of that person; it may be an agency situation of temporary workers or the like; or it may be the lump labour situation in the construction industry, which takes so many forms. But in the form of a labour supply contract it would not seem to us to be covered properly by the phrases that exist, but would, we suggest, be covered in certain forms by Amendment No. 65.
It is because of our concern that, even with those elementary and residual controls on deductions, the Bill should nevertheless cover as wide a scope as possible in its definition of "worker" that we have put down these amendments. I beg to move.
Lord Trefgarne: The intention of the Bill in defining a worker covered by Part I is to ensure that the Bill protects everyone who enters into a contract to do work himself other than someone genuinely operating a business or offering a professional service on his own account. Anyone who is employed by someone else should be protected. But if the person doing the work is doing it as part of a business that he is running, he should not be covered by the protections in the Bill. Then the law relating to commercial contracts should operate.
The amendments operate on the definition of "contract". Amendment No. 64 deletes a reference to:
"any other contract whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual".
It would change that to:
"any other contract whereby the individual undertakes to do or perform personally any work or services for another party to the contract who is not a professional client of his".
Unfortunately, that leaves us with a definition which does not clearly exclude those carrying on a business on their own account. A lawyer offers services to a professional client, but it is not clear that a self-employed plumber does so. As drafted, the Bill puts it beyond doubt that both the lawyer and the plumber are treated alike and are not workers. But this is only because of the reference in the definition to a customer of a business undertaking.
Lord Wedderburn of Charlton: I may have misheard, but I think that the noble Lord was suggesting that our second amendment, No. 65, also replaced part of the existing paragraph (c). In fact it is an addition. It is the first amendment which deletes and replaces; the second amendment is an addition.
11 p.m.
Lord Trefgarne: I was just coming to Amendment No. 65. Amendment No. 65 merely adds the words added by the second definition to the first definition. We believe that that is unnecessary. A person who undertakes to do or perform personally any work or services for another person who is not a professional client of his will be encompassed within the existing definition. I hope that I have reassured the noble Lord.
Lord Wedderburn of Charlton: With great respect, no. I rarely have the confidence to say that the noble Lord is wrong, but I think that he is wrong. The present paragraph (c) speaks of a contract,
"whereby the individual undertakes to do or perform personally any work or services for another party to the contract".
I do not go to the exception for the moment because I am not concerned with that in Amendment No. 65. Paragraph (c) does not cover the case which we cover in Amendment No. 65:
"whereby the individual undertakes to do or perform personally any work or services for any other person".
That is the whole point of the labour supply contract example. It is the person who is proffered by one person to do work for another. He is not doing work or services for another party to the contract. There may be no contract with the person for whom he does the work.
Lord Trefgarne: May I try to help the noble Lord further? A labour-only subcontractor is covered by Part I. A person who is genuinely self-employed and operating his own business is not a worker under the Bill. A plumber who does a job for the noble Lord as part of a business that he operates is not covered by Part I. If the noble Lord employs him to do the job personally, not as any part of a business he is operating, then he is covered.
Lord Wedderburn of Charlton: Curiouser and curiouser! May I make a point on the limited matter we are discussing so that the Committee can catch up with us? I am sure that the noble Lord and I know where we are. The point that the noble Lord made about labour-only supply is valid only if the person doing the work is under a contract of service, and in a limited number of cases he is not to anyone. That is not paragraph (a) or (b) and on the Government's case it is not (c), because he is not doing work or services for another party to the contract.
If the noble Lord says that all those cases are not intended to be covered by the Bill, and then links that, as in his last remarks he did, by saying that those are really people carrying on a business undertaking, what a cat is out of the bag and what sharp talons it has! Surely it is well known that in the labour market of today there is an increasing number of persons whose status is obscure.
On what we have been told so far, they are people who will be said to be carrying on some business undertaking which will not come within the definition of "worker". If I may go back to a simple point, the noble Lord says that the Bill protects those who are under the contracts described and not carrying out a professional service or a business of their own, and that

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it is not meant to cover those not in the employment of another. Such phrases are all very well in the textbooks. The noble Lord may be academic on this matter. Let us take the Ready Mixed Concrete case in 1968—
Lord Trefgarne: It is never far from my mind.
Lord Wedderburn of Charlton: —which is never far from the noble Lord's mind, as he says. There is a driver of a concrete mixing lorry. He looks as though he is an employee. He is dressed in the firm's livery, and the lorry and the drum are painted with the firm's colours. He takes orders as to what he is to do, and so on.
When the court unravelled the case, it found that the lorry had been leased to the driver and that the driver had a self-employed contract. The upshot of a complicated case was that he was held to be self-employed. In fact, however, he was part of the business. Ready Mixed Concrete is a basic authority which is adverted to in many such cases. One would have thought that the Bill would make an effort to deal with such a point. Surely there is an intention to control, at any rate by contract, the deductions from payments to such a person without too much regard to the legal categories.
I thought at first that I was giving the Government the benefit of the doubt. I considered that the new formula on business undertaking might be some way of improving on the old 1974 legislation. I am always willing to believe that that is possible. The Minister's remarks suggest, however, that this is not the case. I urge the Minister to consult on the matter. There will be many interested in seeing that cowboy enterprises are not necessarily released from such controls as the Bill contains and that the obscure nature of some of these categories of the self-employed does not invade the area of the Bill without any of its controls, however small they are.
It would be very undesirable if turning to the new formula meant that there were new categories of persons who would not fall within the Bill. It might be in pursuance of some philosophy of deregulation, but it would not really be in pursuance of what the Minister has explained today. I hope that he can look at the definition again in that respect. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 65 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 66:
Page 12, line 16, leave out ("except in so far as") and insert ("whether or not").
The noble Lord said: There are three crucial definitions: that of wages, which we have said we want to look at on Report; that of workers; and now the problem of the employer's error—a matter that in another place has changed its position in the Bill on a number of occasions. Subsection (3) on page 12 of the Bill begins sensibly enough by saying that when a worker is paid less than he should be, this counts as a deduction, but then goes on to state,
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"except in so far as the deficiency is attributable to an error of computation".
Subsection (4) says that,
"the reference to an error of computation is a reference to an error of any description on the part of the employer affecting the computation by him of the gross amount of wages properly payable by him to the worker".
The whole notion of error being a complete defence to the employer, the idea that error should be a defence, is rather novel. We would change that to read that a shortage in the wages is a deduction, whether or not attributable to an error, and allow the matter to go on from there. However, in Amendment No. 67 we suggest another more limited way of dealing with the matter by saying that if there must be an error clause, it should at least be an error for which the employer is not responsible. We have stated previously that the worker should not be liable for what he is not responsible for. We say that the employer should not be liable for what he is not responsible for, but where he is responsible he should be liable for the deduction, at any rate under the terms of the Bill.
One would have thought that, at its lowest, our second amendment, stating that errors for which the employer is not responsible are not deductions, would merit some consideration. It raises the whole question of computational error. It goes back to the problem of exactly when, in instances of notional stock shortages and deductions arising from an error in the computer-ised payroll set-up, the employer is to be regarded as responsible. This might well be a matter for further discussion. What we quesion is whether, as we understand it, the notion of error of any description is a concept that knocks out the low payment to the worker as a deduction. We find that remarkable. Unless there is any further description we would propose what is contained in the amendments. I beg to move.
Lord Trefgarne: Perhaps I may briefly explain what the definition of a deduction from wages in subsections (3) and (4) of Clause 8 achieves. The overall objective of Part I of the Bill is to provide protections against deductions from wages with a remedy before an industrial tribunal. The definition of deductions makes clear that a failure to pay the worker the amount of wages properly payable to him is a deduction from his wages, unless this arises from an error of computation by the employer as to the gross amount of wages properly payable.
Disputes as to whether the employer has correctly ascertained the gross amount of wages due, for example, in disputes over whether the worker worked as many hours as he claims or completed as much work as he claims, are not ordinarily thought of as disputes over deductions from wages. Such disputes should remain matters for the ordinary courts to deal with as breach of contract cases and should not be put to industrial tribunals; otherwise tribunals would be effectively arbitrating on all disputes over wages due, not just deductions from wages.
Therefore, if there is a failure to pay the worker the amount properly payable due to an error of computation as to the gross amount of wages payable, that is not a deduction. However, an employer should not be able to evade the protections by deliberately

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withholding wages and claiming that this is not a deduction. So the Bill says that failure to pay the amount properly payable is a deduction, unless it arises from an error of computation as to the gross amount properly payable.
Amendment No. 66 would make all disputes over wages payable matters for industrial tribunals, removing disputes over the method of calculating gross wages from the ordinary courts. In our view, we should be careful to ensure that, in enabling complaints about deductions to be taken to tribunals, we do not remove from the ordinary courts their function of deciding disputes over the calculation of gross wages. An error in calculating gross wages is not a deduction as the ordinary man understands it.
Amendment No. 67 would require tribunals to consider whether the employer was responsible for any failure to calculate gross wages correctly and determine the case if he was. This would give rise to complex tribunal cases, but our main objection remains that, in our view, the ordinary courts should deal with disputes over errors in calculating gross wages due. If we make a further distinction—errors caused by the employer going to tribunals; errors caused by someone else going to the courts—we have a recipe for great confusion and complexity. I am sorry, therefore, that I do not find either amendment very helpful.
Lord Wedderburn of Charlton: I hear what the noble Lord the Minister says. The next time I meet someone coming back from the shop or the garage and he says, "I thought that I was going to be paid £64 this week and they have only paid me £59—I think that is a rotten deduction", I shall say, "George, that is just an error in computation; it is not a deduction as the ordinary man would see it." I shall then run very fast and get away as soon as I can.
Prima facie is not someone who is paid less, and straightforwardly and intentionally less—"I assume that the matter has been raised somewhere but I thought I was getting £64"; "No, you are getting £59 this week and that is it"—entitled to say, in a calm moment and after taking some good advice, when he catches up with me, "It should be £64, so there has been a deduction"? If he goes back to the works and they say, "Sorry about that, we deducted £5 from your pay wrongly on the computation"—which is what they would say—he will say, "Don't say that to me; that was just an error in computation". The ordinary book-keeper would regard it as something totally different.
There are two real points here. The Government have been under intense pressure from employers to have an error clause somewhere in the Bill. I think I am right in saying that it used to be partly covered by something in the original Clause 1, but I stand to be corrected if that is not so. It has been floating around in discussions in the other place. Now it has turned up here in this form, partly because of that pressure. They justify it by saying, "We must not have these matters go to the industrial tribunals".
I happened to be one of those who was slow to support the general extension of the industrial tribunal jurisdiction over all forms of employment disputes. I
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have reasons for that but they relate to collective labour relations which form very little part—and it is interesting how little—in this Bill, because the union presence is not in any way strong in many of these areas. But I do not see that reasoning apply to the question of wage disputes that the Minister described. Have the Government no confidence in industrial tribunals that they can allow them to deal with all the other matters they deal with but cannot, at any rate within a certain limit of jurisdiction in monetary terms, allow them to deal with errors of computation as well as deductions, when it is quite obvious that the line between the two is going to be difficult to draw in real life?
"No", says the Minister, "you must go to the county court or the High Court". It is usually more expensive. Some procedures of the county court might get you by, but certainly it is slower, and said at any rate not to be so simple and informal or so cheap. Why? What reason is there except to say that the jurisdiction of these other courts must be preserved? It sounds like a battle between the solicitors and the Bar, translated into a battle between the industrial tribunals and the ordinary courts. Not many of the judges would see it that way. I do not think there would be much opposition on either side to this matter.
I do not see that the Minister has done anything but rehearse a theorem there about jurisdiction. He and the Government have responded to pressure, because employers want a get-out for computational error described in some fashion and here it is "error of any description of a computational kind". We think that goes too far. It does not seem to be right. It will not be understood by ordinary workers in the way that the Minister described in the majority of cases, and it will cause a great deal of ill-feeling when people are told, "You don't have any rights in what we say is a computational error", rather than getting around a table and trying to sort out what went wrong for what looks like a deduction to the worker, and the employer then to have the onus of explaining the matter to the worker involved. It is sad that the Government should, on such curiously formalistic grounds (at least overtly) press these clauses in this form. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 67 not moved.]
Clause 8 agreed to.
Clauses 9 and 10 agreed to.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 68:
After Clause 10, insert the following new clause:
("Cashless wages.

.—(1) An employer shall not make any payment of wages to any worker employed by him otherwise than in current coin of this realm unless on the occasion of each payment the conditions of subsection (2) are satisfied.

(2) The conditions are—

(a) the employer and the worker have agreed on such payment in a relevant provision of the worker's contract, or the worker has previously signified to his employer his consent to it in a signed written document, within the meaning of section I above; and

(b) where payment is to be made by the employer into an account of a bank, deposit-taking or financial institution or other body, the employer has agreed to make the payment

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into the account notified to him by the worker at least seven days before the date on which the wages are payable.

(3) Where an employer fails to make a payment to the worker in accordance with, or contravenes any condition of, subsection (2) above, the amount of the wages payable shall be treated for the purposes of section 5 above as a deduction which contravenes section 1(1) of this Act.").

The noble Lord said: Amendments Nos. 68 and 69 deal with a completely new matter. It is the matter that most people think of as the Truck Acts. I shall move Amendment No. 68 briefly in order to put on record, and for the Minister to respond to, what is a serious matter but which can be dealt with much more quickly.
Cashless pay is a serious issue. It is true that the Truck Act 1831 and its amending statutes over the years have stood as a kind of obstacle to the payment to manual workers, or workmen as they were described, in anything other than coin of the realm, except for the list of permitted deductions and some other exceptions in the statutes. But there was one thing which happened in 1960 which is often forgotten if one looks at the Government's presentation of this Bill in another place. That is the Payment of Wages Act 1960, which allowed for the payment to manual workers, and everybody else alike, of wages by way of cheque, or payments into an account, or bank money order, or postal order, and so on, where that was requested by the worker concerned.
It is true that less use has been made of that Act than was expected in some circles. It is true that a smaller number of manual workers in this country appear to be paid by means other than cash than in some—indeed most—western European countries. So there is a case for action in terms of the legislation. There is a case for loosening up the Payment of Wages Act 1960; but in our view it does not follow that one should—to use the expression of my noble friend Lord McCarthy, his repetition of the Minister's phrase used so often today—"Leave it to the parties"; not in every case at least. We say that there should be some conditions.
In the amendment we suggest they should be the agreement of the employer and the worker and that should be clearly evidenced, as we suggest. We suggest too that there should be some minimum condition. The minimum condition that we put here is that where the payment is to be made into an account then the employer will agree to pay it into an account notified by the worker at reasonable notice beforehand. We say too that where there is an infringement of either of those principles that should count as a matter for complaint under Section 5 in the industrial tribunal.
In saying those things that is what we think the law should do as a step forward. We cannot see the objection to that way forward. But we also say that far more attention should be given to the question of banking hours, to the facilities in various areas for cashing cheques or orders or for using cashless methods. Attention should be given also to bank charges. It is true that some accounts now operate which did not operate and which workers might not have used 10 years ago without so many charges. Bank charges are not dead, as I am sure many Members of the Committee will testify. The issue of exactly when and how such payments should be made seems to us
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to be something which is far more than simply to sweep away the Truck Acts.
The Government say that they would not—this is from their Paper of 1983—seek to impose any obligation upon employees to accept cashless pay. Not imposing obligations on employees to accept cashless pay is, we think, something slightly more than merely allowing the matter to be put in a contract, although we think that should be so and we think it must be done with very clear evidence. We ourselves believe that it is much better to move on this area by way of collective bargaining than by way of action with individual employees because it seems to us that then various other social considerations can be taken into account.
The mere repeal of the Truck Acts 1831 to 1887 in this case is not perhaps enough without supporting social policies and without a few further legal conditions. I beg to move.
Lord Rochester: I feel obliged to speak briefly to this amendment. As I explained at Second Reading, my noble friends and I are very much in favour of repealing the Truck Acts and extending cashless pay. In our view that will bring about greater security, savings in manufacturing costs and, most important, will make a substantial contribution towards the elimination of differences between the employment conditions of manual workers and those of white-collar staff based on social distinctions which became outdated long ago. Against that background, I am reluctant to see any restrictions placed on the extent to which cashless pay may be made.
There is one exception which in my view should be made to that general rule. It is that an employee should have the right to choose the particular financial institution through which he receives non-cash pay. In those circumstances, I am rather hoping that the noble Lord, Lord Wedderburn, will not press this particular amendment, for on the next one I think he may find me more supportive.
Lord Trefgarne: This amendment brings us to what we have to recognise is a fundamental difference between the Government and noble Lords opposite. In the reign of William IV, in 1831, Parliament passed the first Truck Act to give artificers, who today we broadly regard as manual workers, the right to insist on being paid in coin of the realm. The abuse that was thus outlawed was the device of paying labourers in truck, that is, in tokens exchangeable only at the company shop.
Today, this is an unheard-of abuse although the Truck Acts do not apply to any of the non-manual workers who today probably make up, depending on how you define them, over half of the employees in employment. Given this fact and the advances in the banking system over the last 150 years or so and, particularly, in the last 10 years or so, the Government propose that the method of wage payment should, for manual workers, join such issues as hours of work, holidays, bonuses, overtime arrangements, etc., as a matter to be agreed contractually between employer and worker. This has always been the position for non-manual workers.

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By contrast, one effect of the amendment would extend to all workers, including non-manuals, the right to insist on payment in cash unless certain conditions are satisfied. This introduces consistency but is moving entirely in the wrong direction. In our view, the method of wage payment should be entirely for contractual agreement. That is right in principle. We recognise that this will probably lead to a gradual acceleration of the trend towards cashless methods of wage payment since many employers have held back from such a move due to the fear that a handful of manual workers, by insisting on continuing to be paid in cash, could put them to the expense of having to run two payment systems side by side. For two main reasons, business efficiency and the reduction in opportunities for crime, we believe that a gradual shift to non-cash methods of wage payment is to be encouraged.
Another effect of the amendment would be to require employers to pay wages into a financial institution of the workers' choosing. This suggests that noble Lords opposite fear that employers will press workers into opening accounts at particular banks. I have to say that we are unconvinced that this is a well founded fear. In general, there is no advantage to employers in having their workers all banking with the same bank. The main point again is that the Truck Acts have never applied to non-manual workers and there is no evidence that significant problems have arisen for non-manuals in being dragooned reluctantly into particular banks. The Government would be very reluctant indeed to reintroduce new and different statutory controls and would only do so if there was some clear evidence of potential abuse; and there is none of that.
Will things be any different for manual workers? We can surely put aside the stereotyped view that sees non-manual workers as educated, well-paid and able to cope with the banking system while manual workers are low-paid, poorly educated and in need of greater protection. Many non-manual jobs, particularly clerical jobs, are neither skilled nor highly paid while many manual jobs are both highly skilled and well paid. If there is no evidence that the absence of statutory protection has caused problems for non-manuals, we are surely not entitled to assume that it will cause problems for manuals.
Finally, to give the worker a right to recover as a deduction an amount which he has actually been paid, although not in the way provided for in Subsection (2), is to distort totally the meaning of the word "deduction".
Given that the amendment imports statutory controls into an area where they are not needed, I am afraid that I could not agree to it.
11.30 p.m.
Lord Wedderburn of Charlton: I am grateful to the Minister for what he has said, but I do not understand the differences between us to be as great as he thought. It seemed to me that the only difference between us really was that I did not mention William IV and artificers. We want contracts. There is a difference in regard to what should be counted as a deduction and there is the other difference that we reach in the next amendment, which perhaps should be dealt with then.
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That there should be progress towards cashless pay is a truism. The question concerns the conditions. It may be that, as the months go on, the Government will think a little more about the need to consider the conditions under which this spread is encouraged, rather than merely repealing the Truck Acts. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 agreed to.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 69:
After Clause 11, insert the following new clause:
("Payment of wages otherwise than by cash.
Where an employer agrees to pay wages to a worker under his contract by way of payment to an account at a bank or other institution, there shall be an implied term in the worker's contract, whether made before or after this Act, conferring on the worker the right to stipulate on reasonable notice the account to which payment shall be made.").
The noble Lord said: I beg to move Amendment No. 69, standing in the names of my noble friends. The Minister and others who spoke in the immediately preceding amendment touched upon the point that we are trying to make in this amendment. The Minister in fact said he could not believe there would be many, if any, employers who would seek to dragoon their employees into receiving their payments through a bank unacceptable to the employee. I think that is right.
However, for a variety of reasons, there may be employees who do wish to choose to have their moneys paid into a form of institution, whether a bank, a building society or Giro, which is different from that chosen by the employer. I am not making a big thing about the employer who says, "Take it or leave it: this is what you want." I genuinely believe that the Government can accept this amendment because it will do little harm. The Minister has already made the point that there cannot be very many divergences between that which the employer thinks is good business, convenient to his business and satisfactory to the employee.
However, there are illustrations that have been brought to my attention where, for instance, a very large employer of labour in the retail sector had made arrangements to pay wages of employees through a certain bank. Where an employee said "That's not the way I want my money to be paid", arrangements were made for those employees to receive a cheque on the Tuesday, before the Friday; and they then had to make arrangements to pay into the bank or building society of their choice their employer's cheque, so that it would be cleared by the Friday. In other words, the employer said, "It's easy for me to make all my payments through my bank and I will pay them into everyone's individual account. For those who do not like that arrangement, I will arrange to pay a cheque which you must collect and which you must then arrange to pay into your institution." I do not think that employees ought to be put to that trouble.
I accept that it puts a little bit of trouble on to the shoulders of the employer: he has to make arrangements to make payments into more than one institution. But I do not think there are going to be very many illustrations; and in order to get this enormous change

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in the payment of wages off the ground, it is not asking too much for the worker to be able to opt to stipulate to his employer, in a reasonable form, as the amendment suggests, and on reasonable notice, how he wishes to have his wages paid.
I think this is sensible. It is modern, and I am absolutely certain that it can cut out any question of a big stick being wielded by the employer. I beg to move.
Lord Rochester: This proposed new clause has the same objective as one which was moved by my honourable friend the Member for Colne Valley in discussion of the Bill by the Standing Committee in another place. As I began to say on the last amendment, it seems to me important, particularly in the early stage of the operation of this legislation—a point made by the noble Lord, Lord Graham, in moving the amendment—that an employee should have the statutory right to choose the particular financial institution to which his cashless pay is paid to him.
Earlier application of this form of pay to white collar staff should not, in my view, be regarded as an indication of what will necessarily happen when Part I of this Bill is introduced. The move to cashless pay for non-manual workers occurred gradually. It was not the result of legislation such as this. In general, it affected people who were already familiar with the operation of a bank account. Moreover, its introduction took place over a period when there was much less unemployment than there is now.
There is nothing in the Bill as it stands to stop an unscrupulous employer from pressing one of his employees to have his cashless pay paid to him through an institution nominated by the employer, on what would amount to a take-it-or-leave-it basis. May I say that I was impressed also by the instance quoted by the noble Lord, Lord Graham, of other problems that can arise in this connection.
In saying what I have done, I realise that only the employee himself can open a bank account, but in the circumstances I have outlined he or she should, in my view, have a right to choose the particular institution through which payment is made. I was hoping, therefore, that in reply the Minister would be able to say more than merely that no great difficulties had arisen in the past in regard to this matter. I think I may be disappointed in that hope, but I await his reply with interest.
Lord Trefgarne: We carefully considered this proposal, which was of course, as the noble Lord, Lord Rochester, has already said, debated in another place. The Government's view is that the time has come to make the method of wage payment entirely a contractual matter and we are consequently very reluctant to reimport new and unnecessary statutory controls.
The fear that underlies this amendment is, frankly, unrealistic. It appears to be based on a belief that employers will seek to force workers to open bank accounts at banks of their choosing. There are a number of reasons for saying that that is unrealistic. First, non-manual workers have never had the right to insist on payment in cash provided by the Truck Acts.
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For them, the method of wage payment has always been a contractual matter. There is just no evidence of non-manual workers having problems with employers who insist on paying wages to accounts at particular banks of the employer's choice. Indeed, given the way the banking system operates, there is unlikely to be any advantage to an employer in asking the worker to bank at one bank rather than another.
Secondly, it is unlikely that an employer could force a worker to open an account at a particular bank if the worker did not want to. No bank is obliged to accept any individual as a customer. A bank requires a signature and information on the standing of the person applying to open an account. The employer has contractually to pay wages by some means. He cannot insist on only paying it by direct debit transfer to a particular bank account or branch, as the worker may not even be able to open an account at that branch. I see no advantage in giving workers a statutory right to stipulate the account to which payment shall be made, if payment is to be made by direct debit. Any worker could enforce such a right, in any case, by simply closing his existing account and opening another one, giving the employer the choice of paying by direct debit to the new account or paying the worker in some other way. The noble Lord, Lord Graham, will therefore not be surprised to hear that I do not see much merit in his amendment.
Lord Graham of Edmonton: I am disappointed because the illustration I gave of what is going on at this moment is well founded. It is not in my interests or in the interests of the Committee to be more specific. The Minister must understand that it is more administratively convenient for some employers not to force their employees to open bank accounts but simply to say, "We wish to draw your wages on the bank of our choice. If you do not have an account with that bank into which that cheque can be paid we are going to issue you a cheque". Issuing them a cheque means that they have to make arrangements. If they do not have a bank account but their banking is done through some other institution, such as a building society, they have to go to the trouble of making those arrangements.
It strikes me that where on the margin the Minister and his advisers see the possibility of irritation or inconvenience to the employer or a burden of irritation or inconvenience to the employee they invariably come down on the side of avoiding inconvenience to the employer. We think that that is rather sad but not surprising. I do not intend to press this amendment at this stage but I am certain that my colleagues will find some other means of bringing this matter back, because it is unfair and unjust even if it is only a handful of employees. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 70 not moved. ]
Schedule 1 agreed to.
Viscount Long: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Port of Fosdyke Bill [H.L.]
Reported from the Unopposed Bill Committee with amendments.
House adjourned at seventeen minutes before midnight.