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11 Feb 2003 : Column 794—continued

2.12 pm

Mr. John Lyons (Strathkelvin and Bearsden): The Minister and the research paper have both described the purpose of the Bill: to close the loophole that exists. That is to be welcomed. If we do not do so, it will encourage abuse by bad employers. Most fair-minded people, both in and out of Parliament, would agree that the loophole must be closed.

I believe that the Employment Appeal Tribunal made the wrong decision. The National Minimum Wage Act 1998 never intended to give the tribunal the opportunity to make such a decision. In the case of Inland Revenue v. Bebb Travel plc, I believe that the decision of the EAT breaks the spirit and intention of the 1998 Act. It sticks in my throat to say so, having completed a tax return for the end of January, but on this occasion the Inland Revenue got it exactly right.

The Act authorises enforcement orders for employees who have left employment. There is no room for debate or discussion of that; it was the purpose and intention of the legislation. The Employment Appeal Tribunal confuses individuals with employers, and that confusion creates tremendous uncertainty in the labour market. The national minimum wage legislation was derided by many in the House, who predicted that it would wreck jobs all over the country and create economic havoc, but it has worked well, as the Minister said in his opening remarks. However, it demands compliance and protection 365 days a year and 24 hours a day. It cannot be used part-time, as the Employment Appeal Tribunal would lead one to conclude.

Employers who are using the loophole are breaching the minimum wage in a way that no one could have foreseen and no one would support. The Act was framed to assist employees, particularly through the use of enforcement officers. That was an important part of the legislation.

Employment law is littered with cases of retrospective payment in terms of wages, holidays and bonuses. People leave their employment and have a case for the payment of wages, bonus, holiday pay or even additional holidays. That is bread-and-butter fare for

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personnel managers throughout the country. It happens daily and such cases are resolved retrospectively. Delays often occur because of failure to agree terms and conditions on a specific date—the anniversary date for employers and employees. That is not unusual, nationally or locally. The anniversary date drifts on for days, weeks and months. In that period, people might decide to leave their employment, but that does not deny them the right to make a claim for the pay increase that might be agreed after they have left, the holidays that might change after they have left, or holiday pay after they have left.

John Robertson: My hon. Friend is very knowledgeable on the subject, which we have looked into in the Scottish Affairs Committee. Does he agree that the case under discussion may be only the tip of the iceberg? It is not unusual for people to leave employment when they are not being paid what they should be paid, but they are too frightened to come forward and allow themselves to be used to test legislation or to help to change the law. The Bill is important for low-paid people and the protection that they need. It is up to us to make sure that it goes forward.

Mr. Lyons: I thank my hon. Friend for raising that important point. He and other colleagues on the Scottish Affairs Committee have looked extensively at compliance, particularly for low-paid workers. I welcome that work and hope it continues.

As I said, delays beyond anniversary dates is normal fare for trade unions and employers, but it is resolved without difficulty in hundreds of agreements across the UK. Enforcement officers are important for the reason that my hon. Friend suggests. There is fear and intimidation, and enforcement officers are an alternative way of trying to resolve a grievance independently of the employee concerned. I would welcome an increase in enforcement officers.

As the Minister mentioned, the employee can take a minimum wage case to an employment tribunal or to the county court, and of course enforcement officers can do the same thing. The figures prove conclusively how important enforcement officers, the tribunals and the county courts are: since 1999, £9 million has been raised from failure to pay the minimum wage. That is a substantial sum, particularly for low-paid workers. It means an awful lot to them.

Tony Cunningham (Workington): Would you agree, however, that many low-paid workers are not in trade unions, and find it extremely difficult to put a case together and go to the tribunal? Would you not—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Gentleman is not the first this afternoon to transgress with regard to the form of address. He should remember by now that he should refer to his hon. Friend in the third person.

Tony Cunningham: My apologies, Mr. Deputy Speaker.

Would not my hon. Friend tell people in that situation that the best way to protect themselves is to join a trade union?

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Mr. Lyons: I thank my hon. Friend for raising that point. I always argue that that is the best way for people to ensure the best terms and conditions for themselves and ensure compliance by their employers with the minimum wage.

I said earlier that the Employment Appeal Tribunal had made a poor decision. I still feel that, having read the decision a number of times. I think that the Government felt that the tribunal had not properly interpreted the legislation. In their evidence to the Low Pay Commission, the Government said:

That is an absolutely correct approach to compliance with the national minimum wage.

In another place my noble Friend Lord Sainsbury said:

Other hon. Members have referred to the fact that in another place Lord Razzall, the Liberal Democrat, and Baroness Miller of Hendon fully supported the changes to the legislation that would guarantee much more protection to employees. That is very important.

Another point that has been raised is that some workers fear raising the issue of failure to pay the minimum wage, or seem to be in difficulty about how best to raise it. If they are not in a trade union or do not feel comfortable about going to an employment tribunal, they often finish up at a citizens advice bureau trying to explain their circumstances. I am sure that they always receive assistance on how to pursue the matter.

Mr. Russell Brown (Dumfries): My hon. Friend is on an extremely important point. He may have had the same experience with some of his constituents as I have had with some of mine, who may not wish to say anything about the national minimum wage and simply tend to look for another job where it is being paid. Not having been paid the appropriate going rate, they fall into the very category that the Bill is looking at, in that they become ex-employees.

Mr. Lyons: My hon. Friend raises a very important point. The evidence proves quite clearly that people in that situation often feel that they are forced to leave a job rather than pursue the issue, as my hon. Friend described.

I should like to give the House four examples. The Scottish Association of Citizens Advice Bureaux has produced documentation on the question of the national minimum wage. It says:

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This is where there are problems related to the minimum wage: other actions are taken because of it as some very awkward employers try to find ways around the legislation. That is why all of us need to make sure that the legislation is tightened up in a way that makes it impossible for people—

Mr. Bercow: I am very grateful to the hon. Gentleman for giving way. I have been listening to his speech with interest and approval. What the hon. Member for Dumfries (Mr. Brown) said was perfectly valid, but it is worth while also looking at the other side of the equation. If former employees cannot secure redress, even though of course they no longer have any reason to be anxious about the reaction of their former employer, there is obviously scant hope for existing employees seeking to secure redress for past underpayment. In that sense, there is a commonality of interest in supporting the Bill between current and past employees.

Mr. Lyons: That is a very valid point. The position clearly is that when people leave a job, the fact that they have highlighted a problem, either to the compliance people or the citizens advice bureau, may well bring in enforcement for people who are still employed by that employer. There is clear evidence that that has happened in the past. We return to a situation in which there may be a collective of workpeople unprepared or frightened to raise the issue, despite the fact that colleagues are leaving regularly, but the enforcement officers give that alternative, saying "We are here to find out what is happening on the minimum wage." No one knows who has reported the matter, and there is no pressure, hopefully, on employees for that reason. But this leads to an interesting area of work, which is—

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