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11 Feb 2003 : Column 783—continued
Human Fertilisation and Embryology Amendment Bill
Mr. David Stewart accordingly presented a Bill to amend and extend certain enactments regulating the treatment of women undergoing IVF procedures and to extend the range of information and counselling provided by health authorities: And the same was read the First time; and ordered to be read a Second time on Friday 28 February, and to be printed [Bill 56].
Orders of the Day
National Minimum Wage (Enforcement Notices) Bill [Lords]
Order for Second Reading read.
1.32 pm
The Minister for Employment Relations, Industry and the Regions (Alan Johnson) : I beg to move, That the Bill be now read a Second time.
The minimum wage is now firmly established as a feature of the UK labour market and widely recognised as an outstanding success. Since its introduction in 1999, more than 1 million people have benefited from increased pay and we have tackled the appalling situation whereby poverty wages of £2 per hour or less were being paid. That has been achieved without a significant adverse impact on business, and the most recent Low Pay Commission report said that the vast majority of employers were complying with the minimum wage and that the enforcement system was working well.
When the Government introduced the national minimum wage in 1998, we had to create an enforcement system that was fair and effective, without putting unnecessary burdens on business. We did not want workers to have to take action on their own behalf against employers, although that remains an option for them if they wish. Low-paid workers are a vulnerable group and are sometimes unable or unwilling to take action on their own behalf. Fear and intimidation can also deter people from making a complaint.
For that reason, we created a network of 12 enforcement teams across the United Kingdom, operated by the Inland Revenue. Since April 1999, those teams have completed more than 21,000 case investigations and identified more than £12 million of minimum wage arrears. I should perhaps add at this point that the minimum wage legislation and this Bill cover both the national minimum wage and the agricultural minimum wage. Since 1999, minimum wage officers from both the Inland Revenue and the Department for Environment, Food and Rural Affairs have been issuing enforcement notices to require employers either to pay the minimum wage in future or make good arrears of the minimum wage, or both.
For three years, therefore, our officers have issued those notices on behalf of current workers, who are still working for the employer in question, and former workers, who have left the employer. In August last year, however, the Employment Appeal Tribunal ruled in the case of Inland Revenue v. Bebb Travel plc that officers could only issue enforcement notices requiring the employer to pay the minimum wage in respect of current and future pay periods or in respect of current, future and past pay periods. That ruling means that enforcement officers cannot at present issue notices for past periods alone, and, therefore, that we cannot now issue notices to recover arrears due to former workers.
The Government are determined to restore the position to what we believed it to be before the Bebb decision, for two reasons. First, former workers are entitled to the minimum wage in the same way as current ones. If someone was not paid the minimum wage for
some work that they did, for example, over the Christmas period, we believe that the employer should be required to make good the shortfall, regardless of whether the person concerned is still in their employment.While former workers can take independent action against their employer, that is not as satisfactory as action by our officers for several reasons. The worker may need a reference from their former employer, or may believe that their chances of success against the employer are limited. As I mentioned earlier, low-paid workers are vulnerable and sometimes unable or unwilling to take action on their own behalf.
Mr. Brian H. Donohoe (Cunninghame, South): My hon. Friend may not be aware that I had a case, which was properly represented by my union, the Transport and General Workers Union, of a young girl who was not being paid the minimum wage. The tribunal upheld the case six months ago, and the girl is still waiting for compensation. What will the new measure do for her?
Alan Johnson: If she is a former employee who claimed arrears since August 2002, the enforcement officers would not be able to act on her behalf. Her trade union would be able to represent her at an employment tribunal—that is unaffected. The issue is whether enforcement officers can act for former employees to claim arrears. That is the focal point of this particular amendment to the legislation.
Mr. John Bercow (Buckingham): The Minister will be aware that my noble Friend Baroness Miller of Hendon, on behalf of the Conservative Opposition, supported this thoroughly sensible Bill in the other place, and I am glad that the Opposition are doing so today. Will the Minister reflect on the point that I made in moving an amendment to the National Minimum Wage Bill in 1998 that, when employees are deprived by cowboy or skinflint employers of their legitimate entitlement to be paid the minimum wage, and are obliged subsequently to take steps to recover it, a powerful moral case exists for them to be paid interest on top of the wage that they should have received?
Alan Johnson: The hon. Gentleman was a veteran of the National Minimum Wage Bill. As I recall, his mum advised him to support it; he ignored her advice, but now wishes that he had not. He raises an interesting point, on which, although it is not the specific focus of this legislation, I will reflect.
I was explaining why the situation whereby enforcement officers are not entitled to claim in respect of former workers is unsatisfactory. I noted that the worker may need a reference from their former employer or believe that their chances of success against the employer are limited. That is why we believe that former workers should enjoy the protection of Revenue officers—or DEFRA officers, if the agricultural minimum wage is at issue—in the same way as current workers.
It could also be argued—this is a very important point—that if we do not amend the Bill in this way today, we would create an incentive for unscrupulous
employers to dismiss workers as soon as they knew that they were being investigated to escape the arrears of minimum wage payments. That would obviously be undesirable.The second reason for restoring the previous position is that former workers tend to be much more willing to complain to the minimum wage helplines, which then kick-start the enforcement system. Current workers tend not to complain, for obvious reasons. When our officers follow up the complaints of former workers, they often discover that the minimum wage is being withheld not only from former workers but from current workers. We must not fall into a position where former workers think that we can do nothing for them and therefore stop making complaints. Such complaints can lead to benefit for everyone.
I hope that I have explained clearly why the Bill is needed. This is not a party political Bill and—as the hon. Member for Buckingham (Mr. Bercow) said—it enjoyed support from both sides in another place. It is a small but important Bill that deals with complex issues that I will briefly summarise.
The Bill proposes to insert a new subsection (2A) after section 19(2) of the National Minimum Wage Act 1998. According to the decision of the Employment Appeal Tribunal, the existing subsections (1) and (2) of section 19 allow an enforcement officer to issue a notice only in respect of current and future pay periods or in respect of current, future and past pay periods together. The proposed subsection (2A) allows an enforcement officer to issue a notice on an employer to require him to pay minimum wage arrears to a worker or workers who have, at any time, qualified for the minimum wage. The notice will not have to cover future pay periods, so, if required, officers will be able to issue notices that cover minimum wage arrears for former workers. The proposed subsection will restore the position that the Government believed existed before the recent tribunal ruling.
Subsection (2A) has been drafted deliberately to allow enforcement officers to issue notices in respect of pay reference periods that ended before or after this Bill comes into force. I will say a few words about why that has been done. As matters stand, our officers have not been able to issue any notices on behalf of former workers since August 2002. That was a result of the Bebb Travel Employment Appeal Tribunal decision. Some workers may have taken independent action against their employers, but, although we do not have precise figures, I suspect that many will not have. Unless we allow officers to issue notices covering pay periods before the Bill comes into force, we will not be able to recover, on behalf of former workers, minimum wage arrears that might have arisen in the past.
The vital point to stress is that subsection (2A) will not change anyone's existing entitlement to the minimum wage but merely create a new means of enforcing existing rights to help former workers to recover their proper entitlement. We have approached the Attorney-General on this point and he has advised us that he is content for the subsection to apply in that way.
The proposed subsection (2B) will limit the period that an enforcement notice may cover. Any period that is
- "more than 6 years before the date on which the notice is served"
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