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Small Business, Enterprise and Employment BillPage 140

(b) any appeal under section 37G(1) relating to the penalty notice
must 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
5make the withdrawal ineffective).

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

37K Replacement penalty notice

(1) 10Where an enforcement officer—

(a) withdraws a penalty notice (“the original penalty notice”)
under 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
15notice in relation to which the original penalty notice was given,

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

(2) The replacement penalty notice must—

(a) indicate the differences between it and the original penalty
20notice that the enforcement officer reasonably considers
material, and

(b) indicate the effect of section 37L.

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

(4) 25Where a replacement penalty notice is withdrawn under section 37J, no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

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

37L 30Effect of replacement penalty notice

(1) This section applies where a penalty notice is withdrawn under section
37J 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
35section 37G(1) and has not been withdrawn or finally determined
before the time when that notice is withdrawn—

(a) the 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
40against the replacement penalty notice only after withdrawing
the earlier appeal.

(3) If 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
45those sums) is to be treated as having been paid in respect of the
replacement penalty notice, and

Small Business, Enterprise and Employment BillPage 141

(b) any 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
5more than one, the first of them) was paid or recovered.

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

37M Enforcement officers

10The Secretary of State may appoint or authorise persons to act as
enforcement officers for the purposes of this Part.

37N Power to amend Part 2A

(1) The Secretary of State may by regulations—

(a) amend subsection (5) or (6) of section 37F by substituting a
15different amount;

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

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

(2) 20Any provision that could be made by regulations under this section
may instead be included in an order under section 12A(12).

37O Modification in particular cases

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

(a) 25two or more financial awards were made against an employer
on claims relating to different workers that were considered
together 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) 30Regulations under subsection (1) may in particular provide for any
provision of this Part to apply as if any such financial awards or
settlement sums, taken together, were a single relevant sum.

(3) The Secretary of State may by regulations make provision for this Part
to apply with modifications in cases where a financial award has been
35made against an employer but is not regarded as outstanding by virtue
only of the fact that an application for an order for a costs sum has not
been finally determined (or any appeal within section 37B(3)(c) so far as
relating to the application could still be made or has not been
withdrawn or finally determined).

(4) 40Regulations under subsection (3) may in particular provide—

(a) for any provision of this Part to apply, or to apply if the
enforcement officer so determines, as if the application had not
been, and could not be, made;

(b) for any costs sum the amount of which is subsequently
45determined, or the order for which is subsequently made, to be
treated for the purposes of this Part as a separate relevant sum.

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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
5address 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) 10in 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) 15In 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
20United 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—

  • 25“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
    30question 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;

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

  • “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;

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

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

  • “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
    45notice or a penalty notice given in relation to it, have the
    meanings given by section 37E(2);

  • “unpaid amount”—

    (a)

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

    Small Business, Enterprise and Employment BillPage 143

    (b)

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

    subject, in each case, to section 37D;

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

  • 5“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
(whether or not the person is an employer at the time in question).

(3) For the purposes of this Part a relevant sum is to be regarded as having
10been paid in full when the amount unpaid in respect of that sum on the
date of payment has been paid.

(4) 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.

(5) 15The Secretary of State may by regulations amend this section so as to
alter the meaning of “claim”.

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

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

(12A) 20Any 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)
or (b) of that subsection, be included in regulations under
section 37N;

(b) 25in the case of provision that could be made under paragraph (c)
of that subsection, be included in regulations under section
37Q.

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

(10A) 30A 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
appointed or authorised to act under section 37M.

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

(a) 35after “38(4),” omit “and”;

(b) after “40,” insert “and no regulations are to be made under section 37N,
37O or 37Q(5),”;

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

(6) In section 42(1) (interpretation), after “In this Act” insert “(except where
40otherwise 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),
after paragraph (c) insert—

(ca) the disclosure is made for the purpose of enabling or assisting
45an enforcement officer within the meaning of Part 2A of the

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Employment Tribunals Act 1996 to carry out the officer’s
functions under that Part;.

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

(a) 5in 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) in the case of a settlement sum, the certificate under section 19A(1) of
the Employment Tribunals Act 1996 in respect of the settlement under
10whose terms it is payable is issued on or after that day.

151 Employment tribunal procedure regulations: postponements

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

(2) In section 7 (employment tribunal procedure regulations), after subsection
(3ZA) insert—

(3ZB) 15Provision 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) For the purposes of subsection (3ZB)—

(a) “relevant postponement”, in relation to a party to proceedings,
20means the postponement of a hearing granted on the
application of that party in—

(i) the proceedings, or

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

25except in circumstances determined in accordance with the
regulations, and

(b) “postponement” includes adjournment.

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

(3) Provision included in employment tribunal procedure regulations
30under 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
against the party who made the application in respect of any costs or
expenses connected with the postponement, except in circumstances
35specified in the regulations.

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

(a) a late postponement application is an application for the
postponement of a hearing in the proceedings which is made
after a time determined in accordance with the regulations
40(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)
insert—

(2A) Provision included in employment tribunal procedure regulations
45under subsection (1) must include provision for requiring an

Small Business, Enterprise and Employment BillPage 145

employment tribunal, in any proceedings in which a late postponement
application has been granted, to consider whether to make an order of
the kind mentioned in subsection (1) against the party who made the
application in respect of any time spent in connection with the
5postponement, except in circumstances specified in the regulations.

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

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

(b) “postponement” includes adjournment.

National minimum wage

152 Amount of financial penalty for underpayment of national minimum wage

(1) Section 19A of the National Minimum Wage Act 1998 (notices of
15underpayment: financial penalty) is amended as follows.

(2) In 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) 20The amount for each worker to whom the notice relates is the relevant
percentage 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) 25If the amount as calculated under subsection (5) for any worker would
be 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) 30in paragraph (a), for “(4)” substitute “(5A)”;

(b) in 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.

35Exclusivity in zero hours contracts

153 Exclusivity terms unenforceable in zero hours contracts

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

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(2) After section 27 insert—

Part 2A Zero hours workers
27A Exclusivity terms unenforceable in zero hours contracts

(1) 5In 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
work or services available to the worker, and

(b) 10there is no certainty that any such work or services will be made
available to the worker.

(2) For this purpose, an employer makes work or services available to a
worker if the employer requests or requires the worker to do the work
or perform the services.

(3) 15Any provision of a zero hours contract which—

(a) prohibits the worker from doing work or performing services
under another contract or under any other arrangement, or

(b) prohibits the worker from doing so without the employer’s
consent,

20is unenforceable against the worker.

(4) Subsection (3) is to be disregarded for the purposes of determining any
question whether a contract is a contract of employment or other
worker’s contract.

27B Power to make further provision in relation to zero hours workers

(1) 25The Secretary of State may by regulations make provision for the
purpose of securing that zero hours workers, or any description of zero
hours workers, are not restricted by any provision or purported
provision of their contracts or arrangements with their employers from
doing any work otherwise than under those contracts or arrangements.

(2) 30In this section, “zero hours workers” means—

(a) employees or other workers who work under zero hours
contracts;

(b) individuals who work under non-contractual zero hours
arrangements;

(c) 35individuals who work under worker’s contracts of a kind
specified by the regulations.

(3) The worker’s contracts which may be specified by virtue of subsection
(2)(c) are those in relation to which the Secretary of State considers it
appropriate for provision made by the regulations to apply, having
40regard, in particular, to provision made by the worker’s contracts as to
income, rate of pay or working hours.

(4) In this section “non-contractual zero hours arrangement” means an
arrangement other than a worker’s contract under which—

(a) an employer and an individual agree terms on which the
45individual will do any work where the employer makes it

Small Business, Enterprise and Employment BillPage 147

available to the individual and the individual agrees to do it,
but

(b) the employer is not required to make any work available to the
individual, nor the individual required to accept it,

5and in this section “employer”, in relation to a non-contractual zero
hours arrangement, is to be read accordingly.

(5) Provision that may be made by regulations under subsection (1)
includes provision for—

(a) modifying—

(i) 10zero hours contracts;

(ii) non-contractual zero hours arrangements;

(iii) other worker’s contracts;

(b) imposing financial penalties on employers;

(c) requiring employers to pay compensation to zero hours
15workers;

(d) conferring jurisdiction on employment tribunals;

(e) conferring rights on zero hours workers.

(6) Provision that may be made by virtue of subsection (5)(a) may, in
particular, include provision for exclusivity terms in prescribed
20categories of worker’s contracts to be unenforceable, in cases in which
section 27A does not apply.

For this purpose an exclusivity term is any term by virtue of which a
worker is restricted from doing any work otherwise than under the
worker’s contract.

(7) 25Regulations under this section may—

(a) make different provision for different purposes;

(b) make provision subject to exceptions.

(8) For the purposes of this section—

(a) “zero hours contract” has the same meaning as in section 27A;

(b) 30an employer makes work available to an individual if the
employer requests or requires the individual to do it;

(c) references to work and doing work include references to
services and performing them.

(9) Nothing in this section is to be taken to affect any worker’s contract
35except so far as any regulations made under this section expressly
apply in relation to it.

(3) In section 236(3) (orders and regulations subject to affirmative procedure),
after “made under section” insert “27B,”.

Public sector exit payments

154 40Regulations in connection with public sector exit payments

(1) Regulations may make provision requiring the repayment of some or all of any
qualifying exit payment in qualifying circumstances (see section 155).

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(2) The regulations may make such other provision in connection with the
repayment mentioned in subsection (1) as the person making the regulations
thinks fit.

(3) A qualifying exit payment is a payment of a prescribed description—

(a) 5made to an employee of a prescribed public sector authority in
consequence of the employee leaving employment, or

(b) made to a holder of a prescribed public sector office in consequence of
the office holder leaving office.

(4) The descriptions of payment which may be prescribed by virtue of subsection
10(3) include—

(a) any payment on account of dismissal by reason of redundancy (read in
accordance with section 139 of the Employment Rights Act 1996),

(b) any payment on voluntary exit,

(c) any payment to reduce or eliminate an actuarial reduction to a pension
15on early retirement,

(d) any severance payment or other ex gratia payment,

(e) any payment in respect of an outstanding entitlement (such as to
annual leave or an allowance),

(f) any payment of compensation under the terms of a contract,

(g) 20any payment in lieu of notice, and

(h) any payment in the form of shares or share options.

(5) If more than one qualifying exit payment is payable to an employee or office
holder the provision made in the exit payments regulations is to apply in
relation to the aggregated payments.

(6) 25For the purposes of this section and sections 155 and 157—

  • an “exit payee” is an employee or office holder to whom any qualifying
    exit payment is payable,

  • the “exit payments regulations” are regulations under subsection (1),

  • a “responsible authority” means an authority by which any qualifying exit
    30payments are payable, and

  • “prescribed” means prescribed by the exit payments regulations.

155 Section 154(1): further provision

(1) For the purposes of section 154(1) circumstances are qualifying circumstances
if—

(a) 35an exit payee becomes—

(i) an employee or a contractor of a prescribed public sector
authority, or

(ii) a holder of a prescribed public sector office,

(b) less than one year has elapsed between the exit payee leaving the
40employment or office in respect of which a qualifying exit payment is
payable and the event mentioned in paragraph (a), and

(c) any other prescribed conditions are met.

(2) The exit payment regulations may, in particular, make provision—

(a) exempting an exit payee from the requirement to repay in the
45prescribed circumstances;

Small Business, Enterprise and Employment BillPage 149

(b) exempting some or all of a qualifying exit payment from that
requirement in the prescribed circumstances;

(c) for the amount required to be repaid to be tapered according to the time
which has elapsed between an exit payee leaving employment or office
5and the event mentioned in subsection (1)(a);

(d) imposing duties, in connection with a qualifying exit payment, on—

(i) an exit payee,

(ii) a responsible authority, and

(iii) a subsequent authority;

(e) 10as to the arrangements required to be made by an exit payee to repay to
a responsible authority the amount of a qualifying exit payment
required to be repaid;

(f) for preventing an exit payee from becoming an employee or a
contractor, or a holder of a public sector office, as mentioned in
15subsection (1)(a) until the arrangements required by virtue of
paragraph (e) have been made;

(g) as to the consequences of an exit payee failing to repay the amount
required to be repaid (including the dismissal of the exit payee).

(3) In subsection (2)(d)(iii) a “subsequent authority” means—

(a) 20in relation to an exit payee who becomes an employee or a contractor,
a public sector authority of which the exit payee becomes an employee
or a contractor, or

(b) in relation to an exit payee who becomes a holder of a public sector
office, an authority which is responsible for the appointment.

(4) 25For the purposes of this section an exit payee becomes a contractor of a public
sector authority if the exit payee provides services to the authority under a
contract for services.

156 Power to make regulations to be exercisable by the Treasury or Scottish
Ministers

(1) 30The power to make regulations under section 154(1) is exercisable—

(a) by the Scottish Ministers in relation to payments made by a relevant
Scottish authority;

(b) by the Treasury in relation to any other payments,

(but this subsection is subject to subsection (2)).

(2) 35Where the relevant Scottish authority is the Scottish Administration the power
to make regulations under section 154(1) is exercisable by the Treasury (instead
of the Scottish Ministers) in relation to payments made to—

(a) the holders of offices in the Scottish Administration which are not
ministerial offices (read in accordance with section 126(8) of the
40Scotland Act 1998), and

(b) the members of the staff of the Scottish Administration (read in
accordance with section 126(7)(b) of that Act).

(3) In this section “relevant Scottish authority” means—

(a) the Scottish Parliamentary Corporate Body, or

(b) 45any authority which wholly or mainly exercises functions which would
be within devolved competence (within the meaning of section 54 of
the Scotland Act 1998).