Wages Bill

HL Deb 24 June 1986 vol 477 cc228-74

House again in Committee on Clause 2.

[Amendment No. 35 not moved.]

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 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Although there are old cases, I hope that I am not a century out of date, as we are constantly told things are in this Bill in our debates.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 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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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, 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 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 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 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 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 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 withdraw an amendment with more alacrity. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 agreed to.

Lord McCarthy moved Amendment No. 60: After Clause 6, insert the following new clause:

("Unfair dismissal

1. .—(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. (2) Section 64(1)(a) of the 1978 Act (qualifying period) shall not apply to a dismissal to which subsection (1) above applies.
3. (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. (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. (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 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 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 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 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 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 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 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 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, 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 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 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 moved Amendment No. 68:

After Clause 10, insert the following new clause:

("Cashless wages.

1. .—(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. (2) The conditions are—
1. (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
2. (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 269 into the account notified to him by the worker at least seven days before the date on which the wages are payable.
3. (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 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.

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.

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 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 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. 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.