HL Deb 23 January 2003 vol 643 cc839-46

Report received.

Clause 1 [Enforcement notices]:

Baroness Miller of Hendon moved Amendment No. 1: Page 1, line 14, at end insert— (2B) No notice under subsection (2) or (2A) shall be served in respect of any pay reference period more than six years before that date of the service of the notice."

The noble Baroness said: My Lords, I must confess that I am not surprised to find myself having to take up the time of the House by bringing back this extraordinarily simple, wholly constructive, nonpolitical and uncontroversial amendment. As your Lordships know, the Government have adopted a totally Pavlovian, rejectionist attitude to any amendment that I may propose. In the almost six years since that disastrous day when I moved from that side of the Dispatch Box to this, there has never, to the best of my recollection, been an occasion when the Government readily conceded that I had a valid point. That is not to say that I have not won amendments; nor is it to say that they have not finally conceded—at the tenth minute of the ninth hour, if you know what I mean. But the truth is that it has never been easy. The concession was never given quickly or smilingly. I am not saying that it is down to the noble Lord, Lord Sainsbury. I am very hopeful that the noble Lord, Lord McIntosh, filling in for the noble Lord, Lord Sainsbury, will show a different attitude from today onwards.

When all else has failed and no logical argument could possibly be mustered, Ministers have always fallen back on the line that, "This amendment is not necessary". The National Minimum Wage (Enforcement Notices) Bill, an amending Bill, is necessary because of the way in which the original legislation has been interpreted in practice. As noble Lords will know, a tribunal decided that an employee who left his employment could not retrospectively gain his lost minimum wage. The Bill, and the National Minimum Wage Act 1998 itself, commit the, Officer acting for the purposes of the Act", to make a retrospective order in relation to any underpayment of the national minimum wage for an unlimited period of time. That is not a fanciful interpretation of the legislation. It is the plain wording of the 1998 Act, which does not place any limitation on how far back the order can go.

Noble Lords who have sat through these debates will recall that, on Second Reading, I said that I would table an amendment to this effect because the retrospection allowed in relation to notices seemed unlimited. However, the noble Lord, Lord Sainsbury, said, "No, the notice can go back only three years, so you needn't worry", but I knew that he was wrong. Subsequently, after our debate on Second Reading, he wrote to me and said: There is no limit in the legislation on how far back enforcement notices may be taken". That could not be clearer. However, when we discussed this amendment in Committee and I thought that the Government would immediately accept it, what was the Minister's argument? As usual, he began by saying: in practice, we believe that the amendment is not needed". He went on to claim that the fact that employers are required to hold records for only three years would mean that, the Revenue would find it difficult to pursue cases that went back further than three years".—[Official Report, 9/1/03; cols. 1103–04.] It may be difficult, but it is not impossible.

The Minister himself readily accepted my argument that there are means of proving underpayment other than the employer's records; for example, with payslips kept by the employee himself. He admitted to the Committee that two routes were open to the employee and the enforcement officer in respect of any alleged underpayment. The first is the ordinary civil courts, where any claim would be subject to the provisions of the Limitation Act 1980. The Minister told the Committee that he agreed that that legislation would apply. That limitation restricts claims for any simple civil debt to a period of just six years.

However, as the Minister admitted in his letter to me, and as he admitted to the Committee, under the tribunal procedure, claims could go back much longer. He said that, it seems likely that few cases … will go back further than six years". A few cases? One case would be too many.

There is an unacceptable anomaly. It would be so easy just to accept it and allow the two procedures to operate side by side. Parliament should not, however, be creating a two-tier system of justice whereby people can get more in one court than in another.

I am sure that the Minister's obstinate refusal to accept my amendment, the principle of which he told your Lordships he agreed with, is due to a total misunderstanding of what it actually says. I say that with all due respect to the noble Lord, Lord Sainsbury, especially because he is not here. In Committee, he said: I … think it would be wrong to create a position in which officers using the tribunals route could not go back as far as the workers themselves could".—[Official Report, 9/1/03; cols. 1103–04.] The amendment provides for absolute parity between the two routes. That is why I say that he must have misunderstood the amendment—which provides six years' retrospection regardless of the forum, court or tribunal, that the employee chooses.

There is currently a discrepancy whereby an applicant to a tribunal can in theory present a grievance dating back 10 or 20 years. In a court, however, the applicant would be bound by the statute of limitations which allows only six years. The situation is a nonsense. I am sure that, this time, the noble Lord, Lord McIntosh, will agree. I beg to move.

Lord Razzall

My Lords, the noble Baroness, Lady Miller of Hendon, clearly feels aggrieved that as regards minimum wage and employment legislation it is very difficult for her to persuade the Government to accept her amendment. She seems to believe that some prejudice is held by the Government against her and that if someone else produced the amendment perhaps it would be accepted by them. I cannot speak for the Minister who, as we know, can speak most ably for himself.

On this occasion, as on so many others, we will not be supporting the noble Baroness, not because we have any prejudice against her—indeed, how could one possibly have that?—but simply because on this, as on many other matters, we disagree with her.

First, I am not sure that it is a sound thesis on which she bases the amendment. Why should an individual holding a number of payslips, and who has become aware for the first time that he or she has been underpaid, be artificially restricted in the remedies available to him or her? Why should they be so restricted?

Secondly, as a former lawyer I am always extremely dubious of legislation attempting arbitrarily to interfere with limitation periods. I do not wish to anticipate what the Minister has to say, but I believe that the Bill should remain as drafted on this point and that it should not artificially attempt to interfere with the limitation period.

Lord Blackwell

My Lords, can the Minister say how the time period relates to claiming back payment for benefits? Obviously, a number of recipients of the national minimum wage may well be recipients of benefits or be entitled to benefits. I wonder what is the Government's obligation as regards people claiming past benefits and how that would appear in relation to parity with their ability to claim on employers.

11.15 a.m.

Lord McIntosh of Haringey

My Lords, I remind the House of what the noble Lord, Lord Sainsbury of Turville, said in Committee about the practical effects of this amendment. He explained that there are two ways of pursuing a failure to comply with an enforcement notice. He said that the first is to pursue it through the county courts, but in such cases the Limitation Act 1980 already applies. It is only possible to recover arrears for a period of up to six years from the date of each underpayment.

Almost all cases brought by the Revenue have used that route and they are already subject to a six-year restriction. It is possible to proceed through the employment tribunals. It does not happen very often because the claim has to be made within three months, which is a difficult limitation. It means in practical terms that that route has hardly ever been used by the Revenue. The vast majority of cases can only refer back six years before the date on which proceedings are brought. Although in theory some cases could be taken further back, in practice that is extremely unlikely. I remind the House that the noble Lord, Lord Sainsbury, pointed out that employers are required only to keep wage records for three years. Therefore, if records are to be kept for a greater period, which is relevant to the question raised by the noble Lord, Lord Blackwell, the employer would have to keep records going back further.

The noble Baroness, Lady Miller, is right. There is a difference between very rarely and never. We have thought about the matter again. We believe that it would be right in practice to provide for something similar to what the noble Baroness wants. It cannot be the amendment before us because it has technical problems, but it will be one which says roughly what the noble Baroness wants. We hope to have it drafted in time for Third Reading.

I am sorry that that proposal disappoints the noble Lord, Lord Razzall. You cannot win them all. The very purity, if I may put it that way, of the argument put forward by the noble Baroness, Lady Miller, that even if it hardly ever happens—and it could not for a number of years because the national minimum wage relates only as far back as April 1999—ultimately tips the balance.

Baroness Miller of Hendon

My Lords, this really is a success! I began by saying that perhaps the noble Lord, Lord McIntosh, would find a way around the problem. I am sorry that the noble Lord, Lord Razzall, is on the wrong side again, but what can I do about that? We shall look very carefully at what the Government bring forward at Third Reading. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause 2 [Short title, commencement and extent]:

Baroness Miller of Hendon moved Amendment No. 2: Page 1, line 18, leave out subsection (2).

The noble Baroness said: My Lords, I am speechless, really. As noble Lords know, the first amendment was designed to stop employers having to deal with someone who wants to refer to a matter which goes back over a long period.

This second amendment is very much for the benefit of the employee. I am totally even-handed on this side of the House. This amendment is intended to remove from the Bill the provision that postpones the operation of the Act until two months after it is passed. When I proposed this amendment in Committee the Minister argued that he accepted that it was intended to be helpful. The noble Lord, Lord Sainsbury of Turville, said that he had the greatest sympathy with me for wanting to ensure that the employee was entitled to receive his money immediately and not have to wait two months. But the noble Lord had checked with the Cabinet Office, which said it was the custom that the provision did not apply until after two months. Therefore, as a man of custom—he told me this outside the Chamber but indicated more or less the same inside the Chamber—he did not want to change the custom if it was not necessary to do so. What he actually said in the Chamber was that, Bills commence two months after Royal Assent, unless there are pressing reasons for bringing the Bill into force more rapidly".—[Official Report, 9/1/03; Col. 1105.]

At that time I described the amendment as "probing". I wanted to see what possible explanation there could be for making an employee wait two months. When I argued the case in Committee—strongly—I made the point that in any event there was a mistake in the original drafting and therefore it ought to be rectified and enacted immediately.

I took it upon myself to check this matter in the Library. Francis Bennion, in his Statutory Interpretation (4th edition, 2002)—it is therefore up to date—said, The commencement date may be the date of passing of the Act, or a date specified or indicated in the Act, or a date specified in a commencement order made by a Minister or other functionary". So, although the noble Lord, Lord Sainsbury, said that it was the custom, that interpretation says something a little different. It says that it could be the date of the passing of the Act; it could be a date specified or indicated in the Act; or it could be a date specified in the commencement order.

Interestingly enough, an investigation carried out in 1979 by a Statute Law Society working party looked at 105 public general Acts passed between 1st January 1978 and April 1979—a period of 14 months—to ascertain when Acts usually come into force. They found that 41 Acts came into effect on the exact date of the passing of the Act; 12 Acts came into force on a date specified in the Act; and 14 Acts came into force on the expiry of a period of one, two or three months after passing. I understand that the Minister may say that that investigation was carried out in 1978 and 1979 and that the custom now is that Acts commence two months after Royal Assent, as he said in Committee, but I asked the Library to check a little further.

The noble Lord, Lord Razzall, made the point in regard to my first amendment that employees should be able to claim their entitlement and to have it backdated, however far. Equally, I am sure that he would not want employees to have to wait for their money if it is not necessary.

The Education Act 2002 was enacted immediately; the Anti-terrorism, Crime and Security Act was enacted immediately; the Armed Forces Act immediately; and the Freedom of Information Act immediately. Those Acts were enacted in 2000–01. The Access to Justice Act was enacted immediately, as was the Northern Ireland (Elections) Act 1998. The Minister may say that there were pressing reasons for those Acts to be enacted immediately and that we can forget custom in those circumstances, but I believe that an employee who is underpaid and wants to claim his money back now should be able to do so. I beg to move.

Lord Razzall

My Lords, I do not always disagree with the noble Baroness. On this occasion I agree with her.

Lord McIntosh of Haringey

My Lords, again, we cannot all win. Of course the noble Baroness, Lady Miller, is right. It is possible for an Act to come into force on Royal Assent—and that often happens—but the established procedure is that unless there are vital reasons for bringing a Bill into force more rapidly, we give those concerned with the Bill—in this case it is both business and employees—a reasonable opportunity to see and understand the implications of a new Act before it comes into force. That is the only reason for delaying it for two months.

However, there is another reason for not worrying about this Bill being brought into force two months later—and that is that it allows enforcement officers to issue notices in respect of pay periods ending before it comes into force. There is therefore no disadvantage whatever in that two-month delay. Past money owed to workers can be recovered whether the Bill comes into force, say, in March or May of this year. Under those circumstances, and in light of the fact that it is true that this is a conservative kind of argument—the Cabinet Office advised us that this was the right thing to do and we have to go back to the Attorney-General and Legislative Programme Committee to effect a change—and particularly in view of the fact that nobody loses by this delay, I hope that the noble Baroness will not press her amendment.

Baroness Miller of Hendon

My Lords, after such a kind explanation, how could I be so ungracious? As long as I have the Minister's absolute reassurance that the delay will not interfere with an employee's rights—I am sure that is correct—I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 3: Page 2, line 2, at end insert— (3A) But, notwithstanding section 20(2) of the Interpretation Act 1978 (c. 30) (construction of references to other enactments), the reference in section 1 to section 19 of the National Minimum Wage Act 1998 (c. 39) shall be taken not to include a reference to that section as applied by section 3A of the Agricultural Wages (Scotland) Act 1949 (c. 30).

The noble Lord said: My Lords, before I move Amendment No. 3 I should apologise to the noble Lord, Lord Blackwell, for not responding to his point on benefits. In fact I cannot respond; I do not know the answer. However, I do not believe it to be relevant because the issue in this Bill concerns records of employment. That does not necessarily apply to benefits. However, I shall write to the noble Lord on that issue.

Amendment No. 3 is a technical amendment dealing with devolved powers which have been requested—too late for the Committee stage—by the Scottish Executive in order to exempt agriculture in Scotland from the provisions of the Bill. Employment is a reserved matter while agriculture is devolved for Scotland and Northern Ireland. In addition, the agricultural minimum wage has been in place throughout the United Kingdom for more than 50 years.

The way the present legislation works is that Schedule 2 of the National Minimum Wage Act 1998 made a number of amendments to the Agricultural Wages Act (Scotland) 1949, to incorporate some of the provisions of the national minimum wage into the agricultural minimum wage. It is clear that the operation of the agricultural minimum wage in Scotland is a matter for the Scottish Executive.

It had two options. The first was to propose a Sewel Motion, which would have allowed Westminster to legislate on this matter even though it is devolved. Before Christmas the Scottish Office informed us on behalf of the Executive that that is what it planned to do. That is why, when we presented the Bill to the House, we covered the agricultural minimum wage in Scotland as well as the rest of the United Kingdom.

However, the Executive has now decided that it does not wish to propose a Sewel Motion and intends to lay parallel independent legislation covering Scottish agriculture in the Edinburgh Parliament. It has asked us to amend our Bill to exclude Scottish agriculture from its scope.

It is not a pretty amendment. I do not claim it is. Anything which has to rely on disregarding matters in the Interpretation Act will never be beautiful. But, in simple terms, it ensures that the provisions in the Bill will not be carried across into the Agricultural Wages Act (Scotland) 1949. It does not affect the existing structure of the national minimum wage or agricultural wages legislation. All it means is that the Scottish Executive will need to introduce parallel legislation to tackle the difficulties we have encountered and to carry across the provisions of this Bill into Scottish agriculture.

The situation is the same in Northern Ireland. But while the Stormont Assembly is temporarily suspended, the Department of Trade and Industry has confirmed with the Northern Ireland Office that it is content for the Bill to cover agriculture in Northern Ireland. I beg to move.

11.30 a.m.

Baroness Miller of Hendon

My Lords, I want to thank the Minister for the courtesy of giving me advance notice of the amendment. We certainly do not object to it, but I want to ask him one question. We note the assurance in the letter, and in what he has now said to the House, that the Scottish Parliament will pass independent parallel legislation. However, can I take it that the word parallel means identical, so that employees in Scotland have exactly the same provisions? That is all that I need to know. It might be parallel but offer them something different.

Lord Mackie of Benshie

My Lords, perhaps the Minister will inform the House what the agricultural minimum wage is in Scotland. My impression is that it is a good deal higher.

Lord Lea of Crondall

My Lords, it would be useful to have some clarification on the record, if not today perhaps in correspondence, about exactly where the line is drawn between the degree of devolvement and the compatibility with the original legislation, so that there is no difference. Intuitively, the answer is reasonably clear, but it would be useful to have some clarification on the record.

Lord McIntosh of Haringey

My Lords, I shall deal first with the question asked by the noble Baroness, Lady Miller. No, I cannot give an assurance that the legislation will be identical. That is a matter for the Scottish Executive and the Scottish Parliament. If they want to do it in a different way, or even if they want to do something different, that is their privilege. That is the meaning of devolution.

I do not know the answer to the question asked by the noble Lord, Lord Mackie, as to whether agricultural minimum wages are higher. I am not sure that I should apologise for that, as it is a devolved matter on which I am not supposed to be informed, let alone responsible.

I agree with my noble friend Lord Lea that there should be the utmost clarity in what matters are covered, reserved and devolved. I do not believe that there is any lack of clarity. I think that the Scotland Act provision that employment matters be reserved and agriculture be devolved, combined with the provision for either separate legislation or a Sewell resolution, covers any conceivable confusion, but if I am wrong I shall write to my noble friend on that point.

On Question, amendment agreed to.

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