Small Business, Enterprise and Employment Bill (HL Bill 91)

(3) Where a penalty notice has previously been given in respect of the
relevant sum, the officer may not give a warning notice until—

(a) 3 months have elapsed since the end of the relevant period
(within the meaning of section 37H) relating to the last penalty
5notice given in respect of the relevant sum, and

(b) if the relevant sum is to be paid by instalments, the last
instalment has become due for payment.

(4) The specified date must be after the end of the period of 28 days
beginning with the day on which the warning notice is given.

(5) 10The specified amount must be the unpaid amount of the relevant sum
on the day on which the warning notice is given.

(6) A warning notice must identify the relevant sum and state—

(a) how the specified amount has been calculated;

(b) the grounds on which it is proposed to impose a penalty;

(c) 15the amount of the financial penalty that would be imposed if no
payment were made in respect of the relevant sum before the
specified date;

(d) that the employer may before the specified date make
representations about the proposal to impose a penalty,
20including representations—

(i) about payments which the employer makes in respect of
the relevant sum after the warning notice is given;

(ii) about the employer’s ability to pay both a financial
penalty and the relevant sum;

(e) 25how any such representations may be made.

(7) The statement under subsection (6)(e) must include provision for
allowing representations to be made by post (whether or not it also
allows them to be made in any other way).

(8) If the employer pays the specified amount before the specified date, the
30relevant sum is to be treated for the purposes of this Part as having been
paid in full.

(9) Subsection (8) is not to be taken to affect the liability of the employer to
pay any increase in the unpaid amount between the date of the warning
notice and the date of payment.

37F 35Penalty notice

(1) This section applies where an enforcement officer—

(a) has given a warning notice to an employer, and

(b) is satisfied that the employer has failed to pay the specified
amount in full before the specified date.

(2) 40The officer may give the employer a notice (a “penalty notice”)
requiring the employer to pay a financial penalty to the Secretary of
State.

(3) A penalty notice must identify the relevant sum and state—

(a) the grounds on which the penalty notice is given;

(b) 45the unpaid amount of the relevant sum on the specified date
and how it has been calculated;

(c) the amount of the financial penalty (see subsections (4) to (6));

(d) how the penalty must be paid;

(e) the period within which the penalty must be paid;

(f) how the employer may pay a reduced penalty instead of the
5financial penalty;

(g) the amount of the reduced penalty (see subsection (8));

(h) how the employer may appeal against the penalty notice;

(i) the consequences of non-payment.

(4) Subject to subsections (5) and (6), the amount of the financial penalty is
1050% of the unpaid amount of the relevant sum on the specified date.

(5) If the unpaid amount on the specified date is less than £200, the amount
of the penalty is £100.

(6) If the unpaid amount on the specified date is more than £10,000, the
amount of the financial penalty is £5,000.

(7) 15The period specified under subsection (3)(e) must be a period of not less
than 28 days beginning with the day on which the penalty notice is
given.

(8) The amount of the reduced penalty is 50% of the amount of the financial
penalty.

(9) 20Subsection (10) applies if, within the period of 14 days beginning with
the day on which the penalty notice is given, the employer—

(a) pays the unpaid amount of the relevant sum on the specified
date (as stated in the notice under subsection (3)(b)), and

(b) pays the reduced penalty to the Secretary of State.

(10) 25The employer is to be treated—

(a) for the purposes of this Part, as having paid the relevant sum in
full, and

(b) by paying the reduced penalty, as having paid the whole of the
financial penalty.

(11) 30Subsection (10)(a) is not to be taken to affect the liability of the employer
to pay any increase in the unpaid amount of the relevant sum between
the specified date and the date of payment.

37G Appeal against penalty notice

(1) An employer to whom a penalty notice is given may, before the end of
35the period specified under section 37F(3)(e) (period within which
penalty must be paid), appeal against—

(a) the penalty notice; or

(b) the amount of the financial penalty.

(2) An appeal under subsection (1) lies to an employment tribunal.

(3) 40An appeal under subsection (1) may be made on one or more of the
following grounds—

(a) that the grounds stated in the penalty notice under section
37F(3)(a) were incorrect;

(b) that it was unreasonable for the enforcement officer to have
45given the notice;

(c) that the calculation of an amount stated in the penalty notice
was incorrect.

(4) On an appeal under subsection (1), an employment tribunal may—

(a) allow the appeal and cancel the penalty notice;

(b) 5in the case of an appeal made on the ground that the calculation
of an amount stated in the penalty notice was incorrect, allow
the appeal and substitute the correct amount for the amount
stated in the penalty notice;

(c) dismiss the appeal.

(5) 10Where an employer has made an appeal under subsection (1), the
penalty notice is not enforceable until the appeal has been withdrawn
or finally determined.

37H Interest and recovery

(1) This section applies if all or part of a financial penalty which an
15employer is required by a penalty notice to pay is unpaid at the end of
the relevant period.

(2) The relevant period is—

(a) if no appeal is made under section 37G(1) relating to the penalty
notice, the period specified in the penalty notice under section
2037F(3)(e);

(b) if such an appeal is made, the period ending when the appeal is
withdrawn or finally determined.

(3) The outstanding amount of the financial penalty for the time being
carries interest—

(a) 25at the rate that, on the last day of the relevant period, was
specified in section 17 of the Judgments Act 1838,

(b) from the end of the relevant period until the time when the
amount of interest calculated under this subsection equals the
amount of the financial penalty,

30(and does not also carry interest as a judgment debt under that section).

(4) The outstanding amount of a penalty and any interest is recoverable—

(a) in England and Wales, if the county court so orders, under
section 85 of the County Courts Act 1984 or otherwise as if the
sum were payable under an order of the county court;

(b) 35in Scotland, by diligence as if the penalty notice were an extract
registered decree arbitral bearing a warrant for execution issued
by the sheriff court of any sheriffdom in Scotland.

(5) Any amount received by the Secretary of State under this Part is to be
paid into the Consolidated Fund.

37I 40Withdrawal of warning notice

(1) Where—

(a) a warning notice has been given (and not already withdrawn),

(b) it appears to an enforcement officer that—

(i) the notice incorrectly omits any statement or is incorrect
45in any particular, or

(ii) the warning notice was given in contravention of section
37E(3), and

(c) if a penalty notice has been given in relation to the warning
notice, any appeal made under section 37G(1) has not been
5determined,

the officer may withdraw the warning notice by giving notice of
withdrawal to the employer.

(2) Where a warning notice is withdrawn, no penalty notice may be given
in relation to it.

(3) 10Where a warning notice is withdrawn after a penalty notice has been
given in relation to it—

(a) the penalty notice ceases to have effect;

(b) any sum paid by or recovered from the employer by way of
financial penalty payable under the penalty notice must be
15repaid to the employer with interest at the appropriate rate
running from the date when the sum was paid or recovered;

(c) any appeal under section 37G(1) relating to the penalty notice
must be dismissed.

(4) In subsection (3)(b), the appropriate rate means the rate that, on the
20date the sum was paid or recovered, was specified in section 17 of the
Judgments Act 1838.

(5) A notice of withdrawal under this section must indicate the effect of the
withdrawal (but a failure to do so does not make the notice of
withdrawal ineffective).

(6) 25Withdrawal of a warning notice relating to a relevant sum does not
preclude a further warning notice being given in relation to that sum
(subject to section 37E(3)).

37J Withdrawal of penalty notice

(1) Where—

(a) 30a penalty notice has been given (and not already withdrawn or
cancelled), and

(b) it appears to an enforcement officer that—

(i) the notice incorrectly omits any statement required by
section 37F(3), or

(ii) 35any statement so required is incorrect in any particular,

the officer may withdraw it by giving notice of the withdrawal to the
employer.

(2) Where a penalty notice is withdrawn and no replacement penalty
notice is given in accordance with section 37K—

(a) 40any sum paid by or recovered from the employer by way of
financial penalty payable under the notice must be repaid to the
employer with interest at the appropriate rate running from the
date when the sum was paid or recovered;

(b) any appeal under section 37G(1) relating to the penalty notice
45must be dismissed.

(3) In a case where subsection (2) applies, the notice of withdrawal must
indicate the effect of that subsection (but a failure to do so does not
make the withdrawal ineffective).

(4) In subsection (2)(a), “the appropriate rate” means the rate that, on the
5date the sum was paid or recovered, was specified in section 17 of the
Judgments Act 1838.

37K Replacement penalty notice

(1) Where an enforcement officer—

(a) withdraws a penalty notice (“the original penalty notice”)
10under section 37J, and

(b) is satisfied that the employer failed to pay the specified amount
in full before the specified date in accordance with the warning
notice in relation to which the original penalty notice was given,

the officer may at the same time give another penalty notice in relation
15to the warning notice (“the replacement penalty notice”).

(2) The replacement penalty notice must—

(a) indicate the differences between it and the original penalty
notice that the enforcement officer reasonably considers
material, and

(b) 20indicate the effect of section 37L.

(3) Failure to comply with subsection (2) does not make the replacement
penalty notice ineffective.

(4) Where a replacement penalty notice is withdrawn under section 37J, no
further replacement penalty notice may be given under subsection (1)
25pursuant to the withdrawal.

(5) Nothing in this section affects any power that arises apart from this
section to give a penalty notice.

37L Effect of replacement penalty notice

(1) This section applies where a penalty notice is withdrawn under section
3037J and a replacement penalty notice is given in accordance with
section 37K.

(2) If an appeal relating to the original penalty notice has been made under
section 37G(1) and has not been withdrawn or finally determined
before the time when that notice is withdrawn—

(a) 35the appeal (“the earlier appeal”) is to have effect after that time
as if it were against the replacement penalty notice, and

(b) the employer may exercise the right under section 37G to appeal
against the replacement penalty notice only after withdrawing
the earlier appeal.

(3) 40If a sum was paid by or recovered from the employer by way of
financial penalty under the original penalty notice—

(a) an amount equal to that sum (or, if more than one, the total of
those sums) is to be treated as having been paid in respect of the
replacement penalty notice, and

(b) 45any amount by which that sum (or total) exceeds the amount of
the financial penalty payable under the replacement penalty

notice must be repaid to the employer with interest at the
appropriate rate running from the date when the sum (or, if
more than one, the first of them) was paid or recovered.

(4) In subsection (3)(b) “the appropriate rate” means the rate that, on the
5date mentioned in that provision, was specified in section 17 of the
Judgments Act 1838.

37M Enforcement officers

The Secretary of State may appoint or authorise persons to act as
enforcement officers for the purposes of this Part.

37N 10Power to amend Part 2A

(1) The Secretary of State may by regulations—

(a) amend subsection (5) or (6) of section 37F by substituting a
different amount;

(b) amend subsection (4) or (8) of that section by substituting a
15different percentage;

(c) amend section 37E(4) or 37F(7) or (9) by substituting a different
number of days.

(2) Any provision that could be made by regulations under this section
may instead be included in an order under section 12A(12).

37O 20Modification in cases of multiple financial awards or settlement sums

(1) The Secretary of State may by regulations make provision for this Part
to apply with modifications in cases where—

(a) two or more financial awards were made against an employer
on claims relating to different workers that were considered
25together by an employment tribunal, or

(b) settlement sums are payable by an employer under two or more
settlements in cases dealt with together by a conciliation officer.

(2) Regulations under subsection (1) may in particular provide for any
provision of this Part to apply as if any such financial awards or
30settlement sums, taken together, were a single relevant sum.

37P Giving of notices

(1) For the purposes of section 7 of the Interpretation Act 1978 in its
application to this Part, the proper address of an employer is—

(a) if the employer has notified an enforcement officer of an
35address at which the employer is willing to accept notices, that
address;

(b) otherwise—

(i) in the case of a body corporate, the address of the body’s
registered or principal office;

(ii) 40in the case of a partnership or an unincorporated body
or association, the principal office of the partnership,
body or association;

(iii) in any other case, the last known address of the person
in question.

(2) 45In the case of—

(a) a body corporate registered outside the United Kingdom,

(b) a partnership carrying on business outside the United
Kingdom, or

(c) an unincorporated body or association with offices outside the
5United Kingdom,

the references in subsection (1) to its principal office include references
to its principal office within the United Kingdom (if any).

37Q Financial penalties for non-payment: interpretation

(1) In this Part, the following terms have the following meanings—

• 10“claim”—

  (a)

  means anything that is referred to in the relevant
  legislation as a claim, a complaint or a reference, other
  than a reference made by virtue of section 122(2) or
  128(2) of the Equality Act 2010 (reference by court of
  15question about a non-discrimination or equality rule
  etc), and

  (b)

  also includes an application, under regulations made
  under section 45 of the Employment Act 2002, for a
  declaration that a person is a permanent employee;

• 20“employer” has the same meaning as in section 12A;

• “enforcement officer” means a person appointed or authorised to
  act under section 37M;

• “financial award” has the meaning given by section 37A;

• “penalty notice” has the meaning given by section 37F;

• 25“relevant sum” has the meaning given by section 37A;

• “settlement sum” has the meaning given by section 37A;

• “specified amount” and “specified date”, in relation to a warning
  notice or a penalty notice given in relation to it, have the
  meanings given by section 37E(2);

• 30“unpaid amount”—

  (a)

  in relation to a financial award, has the meaning given
  by section 37B;

  (b)

  in relation to a settlement sum, has the meaning given
  by section 37C;

  35subject, in each case, to section 37D;

• “warning notice” has the meaning given by section 37E(2);

• “worker” has the same meaning as in section 12A.

(2) References in this Part to an employer, in relation to a warning notice
or penalty notice, are to the person to whom the notice is given
40(whether or not the person is an employer at the time in question).

(3) For the purposes of this Part, a penalty notice is given in relation to a
warning notice if it is given as the result of a failure by the employer to
pay the specified amount before the specified date.

(4) The Secretary of State may by regulations amend this section so as to
45alter the meaning of “claim”.

(5) Any provision that could be made by regulations under subsection (4)
may instead be included in an order under section 12A(12).”

(3) In section 12A (financial penalties), after subsection (12) insert—

“(12A) Any provision that could be made by an order under subsection (12)
may instead—

(a) in the case of provision that could be made under paragraph (a)
5or (b) of that subsection, be included in regulations under
section 37N;

(b) in the case of provision that could be made under paragraph (c)
of that subsection, be included in regulations under section
37Q.”

(4) 10In section 19A (conciliation: recovery of sums payable under settlements), after
subsection (10) insert—

“(10A) A term of any document which is a relevant document for the purposes
of subsection (1) is void to the extent that it purports to prevent the
disclosure of any provision of any such document to a person
15appointed or authorised to act under section 37M.”

(5) In section 41(2) (orders, regulations and rules)—

(a) after “38(4),” omit “and”;

(b) after “40,” insert “and no regulations are to be made under section 37N,
37O or 37Q(4),”;

(c) 20for “or order” substitute “, order or regulations”.

(6) In section 42(1) (interpretation), after “In this Act” insert “(except where
otherwise expressly provided)”.

(7) In section 251B of the Trade Union and Labour Relations (Consolidation) Act
1992 (prohibition on disclosure of information by ACAS), in subsection (2),
25after paragraph (c) insert—

“(ca) the disclosure is made for the purpose of enabling or assisting
an enforcement officer within the meaning of Part 2A of the
Employment Tribunals Act 1996 to carry out the officer’s
functions under that Part;”.

(8) 30The amendments made by this section have effect only in relation to relevant
sums where—

(a) in the case of a financial award, the decision of the employment tribunal
on the claim to which the financial award relates is made on or after the
day on which this section comes into force;

(b) 35in the case of a settlement sum, the certificate under section 19A(1) of
the Employment Tribunals Act 1996 in respect of the settlement under
whose terms it is payable is issued on or after that day.

Employment tribunals: postponements

149 Employment tribunal procedure regulations: postponements

(1) 40The Employment Tribunals Act 1996 is amended as follows.

(2) In section 7 (employment tribunal procedure regulations), after subsection

(3ZA) insert—

“(3ZB) Provision in employment tribunal procedure regulations about
postponement of hearings may include provision for limiting the
number of relevant postponements available to a party to proceedings.

(3ZC) 5For the purposes of subsection (3ZB)—

(a) “relevant postponement”, in relation to a party to proceedings,
means the postponement of a hearing granted on the
application of that party in—

(i) the proceedings, or

(ii) 10any other proceedings identified in accordance with the
regulations,

except in circumstances determined in accordance with the
regulations, and

(b) “postponement” includes adjournment.”

(3) 15In section 13 (costs and expenses), after subsection (2) insert—

“(3) Provision included in employment tribunal procedure regulations
under subsection (1) must include provision for requiring an
employment tribunal, in any proceedings in which a late postponement
application has been granted, to consider whether to make an award
20against the party who made the application in respect of any costs or
expenses connected with the postponement, except in circumstances
specified in the regulations.

(4) For the purposes of subsection (3)—

(a) a late postponement application is an application for the
25postponement of a hearing in the proceedings which is made
after a time determined in accordance with the regulations
(whether before or after the hearing has begun), and

(b) “postponement” includes adjournment.”

(4) In section 13A (payments in respect of preparation time), after subsection (2)
30insert—

“(2A) Provision included in employment tribunal procedure regulations
under subsection (1) must include provision for requiring an
employment tribunal, in any proceedings in which a late postponement
application has been granted, to consider whether to make an order of
35the kind mentioned in subsection (1) against the party who made the
application in respect of any time spent in connection with the
postponement, except in circumstances specified in the regulations.

(2B) For the purposes of subsection (2A)—

(a) a late postponement application is an application for the
40postponement of a hearing in the proceedings which is made
after a time determined in accordance with the regulations
(whether before or after the hearing has begun), and

(b) “postponement” includes adjournment.”

National minimum wage

150 Amount of financial penalty for underpayment of national minimum wage

(1) Section 19A of the National Minimum Wage Act 1998 (notices of
underpayment: financial penalty) is amended as follows.

(2) 5In subsection (4), for the words following “to be” substitute “the total of the
amounts for all workers to whom the notice relates calculated in accordance
with subsections (5) to (5B).”

(3) For subsection (5) substitute—

“(5) The amount for each worker to whom the notice relates is the relevant
10percentage of the amount specified under section 19(4)(c) in respect of
each pay reference period specified under section 19(4)(b).

(5A) In subsection (5), “the relevant percentage”, in relation to any pay
reference period, means 100%.

(5B) If the amount as calculated under subsection (5) for any worker would
15be more than £20,000, the amount for the worker taken into account in
calculating the financial penalty is to be £20,000.”

(4) Omit subsection (7).

(5) In subsection (8)—

(a) in paragraph (a), for “(4)” substitute “(5A)”;

(b) 20in paragraph (b), for “(6) or (7)” substitute “(5B) or (6)”.

(6) The amendments made by this section have effect in relation to notices of
underpayment which relate only to pay reference periods commencing on or
after the day on which this section comes into force.

Exclusivity in zero hours contracts

151 25Exclusivity terms unenforceable in zero hours contracts

(1) The Employment Rights Act 1996 is amended as follows.

(2) After section 27 insert—

“ Part 2A Zero hours workers

27A 30Exclusivity terms unenforceable in zero hours contracts

(1) In this section “zero hours contract” means a contract of employment or
other worker’s contract under which—

(a) the undertaking to do or perform work or services is an
undertaking to do so conditionally on the employer making
35work or services available to the worker, and

(b) there is no certainty that any such work or services will be made
available to the worker.