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Mr. Bill Tynan (Hamilton, South): The hon. Gentleman is making a powerful case for records to be kept for six years in relation to the minimum wage. Would he also argue that companies should be obliged to keep records to protect their employees in similar circumstances?
Mr. Bellingham: That is certainly a strong point. Individual employees have always been able to take
cases involving contractual disputes of beyond six years—in fact, they can cover an unlimited period—to an employment tribunal. Of course, the reason why very few of those cases go back much further is the lack of records. It is very difficult for an employee to prove that a contract has been broken when the records have long since been lost.My other point—perhaps the Government will look at this as well—is that a case cannot be brought before a tribunal unless it is brought within three months of the complaint being discovered or the underpayment taking place. That is another issue that the Minister could have a look at.
We support this small Bill and have made it clear that we support the national minimum wage. We voted against the national minimum wage in the last Parliament because we were genuinely fearful of its effect on jobs, which was the prevailing view of the CBI and the Institute of Directors. For many years until some five or six years ago, a lot of people in the TUC also took a fairly critical view of a minimum wage policy. Over the past five years, however, we have enjoyed a very strong labour market in this country. The national minimum wage has yet to be tested in a sustained economic downturn, so the jury is obviously out on that point so far as the future is concerned. None the less, we support the national minimum wage and we will support it as part of our policy at the next election. If we form the next Government, we certainly do not intend to abolish it, and that is also why we support the Bill this evening.
9.21 pm
Dr. Vincent Cable (Twickenham): I shall speak briefly because as the Conservative spokesman, the hon. Member for North-West Norfolk (Mr. Bellingham), has just said, the Bill is uncontroversial, has received multi-party support at each stage, is supported by both sides of industry and has not been subject to any contentious amendments. We are therefore fully behind it.
It is unfortunate that the Government had to introduce new legislation, but since nobody picked up the legal anomaly identified in the case, I doubt whether there is any opportunity for recrimination; the point was simply missed and has now been rectified. Although the Bill is small it is important, because after a few years probably thousands of people will have accumulated retrospective arrears in respect of the minimum wage. They are precisely the people who, because they are frightened of their employers and of retaliation if they push for arrears, will have accumulated substantial sums. It is therefore very important that the anomaly be put right and that the legal powers and the enforcement procedures should exist. So we fully support what is taking place.
The question of for how long a retrospective claim should be allowed, which was the final point raised by the hon. Member for North-West Norfolk, is the only hint of controversy in the Bill. At various points, he argued for a period of three years to align the legislation with the period for which companies keep records. In some cases, very diligent employees will have kept their records for longer than three years, and he argued that an unfair disadvantage for the employer would be created in such cases. The Government were right to
insist that the period should be longer. When we debated that issue, I expressed the view that I could not see why there should be an upper limit even of six years, but I accept that we have reached a compromise and I am perfectly happy with what has been agreed.In conclusion, I follow the Minister and the hon. Member for North-West Norfolk in reiterating my support and that of my hon. Friends for the minimum wage, for the way in which it has been operated on the advice of the Low Pay Commission, and particularly for the way in which the recent increase has been advanced on the basis of advice from the LPC. I emphasise that point because I have achieved a certain notoriety in some of the Labour equivalents of our "Focus" newsletters. Perhaps because the Labour newsletters do not have the same commitment to scholarship and scrupulous accuracy as our "Focus" newsletters, they somehow tried to pretend that my hon. Friends and I were opposed to the minimum wage and to the recent increase. That is simply not the case.
It was perfectly legitimate to warn that it would have been wrong of the Government to press for a binding two-year increase in the light of economic uncertainty. As I understand it, however, they have agreed to the follow the LPC's advice to proceed with a two-year increase, with a break after one year for the LPC to re-examine the economic data. They have agreed to proceed on that basis, and we are perfectly content with the way in which the matter has been dealt with. We support the minimum wage and the way in which it has been implemented, and we support the Bill.
9.24 pm
Annabelle Ewing (Perth): I rise to support the Bill on behalf of the Scottish National party. I had the pleasure of sitting in Committee, albeit briefly, and I was pleased to note the consensus to ensure that the Bill passed speedily through the procedures of the House. As the Minister said, the Bill is brief but important. Following the unsuccessful appeal by the Inland Revenue against the Employment Appeal Tribunal decision, the legislation was necessary to close the loophole in respect of past periods of employment, particularly when the worker is no longer employed by the relevant employer. It was obviously not the intention of supporters of the original legislation to exclude such workers from the important protection of the National Minimum Wage Act 1998. I welcome Third Reading and I hope that the Bill will shortly be on the statute book and speedily implemented thereafter.
On the agricultural minimum wage, I am pleased that the Scottish Parliament will be left to legislate in that area on the basis that agriculture is a devolved matter. It is right and proper that Scotland should deal with its own devolved legislation, and it is a pity that it does not happen more often.
John Robertson (Glasgow, Anniesland): It is interesting to hear how important the Bill is to Scotland, particularly in respect of agriculture. Would it not have
been better if the hon. Lady's former colleagues had turned up to vote for the minimum wage in the first place?
Annabelle Ewing: Perhaps the hon. Gentleman should read Hansard, the official record of the House. If he did, he would find that the SNP supported and voted in favour of the National Minimum Wage Act 1998. Indeed, the SNP also played an active role in the Committee that considered the Bill and was the only party that sought to speak in the debate on Lords amendments to it. If the hon. Gentleman read Hansard rather than Labour press releases, he might be better informed.
In conclusion, I am happy to reiterate the Scottish National party's support for the original legislation and the present Bill. As I said, I look forward to its speedy implementation.
9.27 pm
Mr. Hoban : I should like briefly to discuss the position of a company in my constituency that will be directly affected by the Bill. The company is called Industrial Rubber and since February 1990 it has sought to comply with minimum wage provisions relating to outworkers. The Government recognise that it is a difficult area to comply with and have produced a consultation document to seek ways to improve the process so that companies and employees can benefit more clearly from national minimum wage regulation.
Outworkers are paid under a fair estimate agreement. Industrial Rubber has tried to implement that agreement as best it can in the circumstances in which it operates. The company went to an employment tribunal, but, as a consequence of losing its case on two points, it now awaits—and has been waiting for six months since the tribunal first met—an enforcement notice. The expectation is that when the Bill is passed, it will receive the enforcement notice, because it will relate to several employees who no longer work for the company.
The company first introduced a fair estimate agreement in February 2000. It believed that, because it worked alongside Inland Revenue, the agreement was compliant with the regulations under regulation 25 of the National Minimum Wage Regulations 1999. However, it transpired that it was not. When advised by Inland Revenue to that effect, the company tried to work with the Revenue to refine the agreement to make it compliant with the regulations in order to avoid having to go to a tribunal and to avoid receiving an enforcement notice.
However, the process is ongoing and that is not satisfactory either for the company or its employees.
In January 2003, following the employment tribunal, the company thought that the Inland Revenue had agreed that its current fair estimate agreement was workable and compliant with the Act. Only a month later, however, the Inland Revenue changed its mind and said that the agreement was no longer compliant. Industrial Rubber had to go back to drawing board to try to amend the estimate agreement to bring it into compliance with the regulations.
I am sure that hon. Members would agree that, if the regulations were straightforward, it would be remiss of the company to fail to comply with them. However, as the Government's consultation document suggests, that is not the case. The document states:
- "The Government has received representations from both homeworker employers and homeworker representatives arguing that fair estimate agreements are not working well. It appears that few employers are actually making use of these agreements."
- "A variety of reasons have been given for this but the principal point seems to be that they are seen as complex and difficult to administer, and that in practice it may be difficult to predict the estimated hours for each block or tranche of work taken on by an individual homeworker from week to week."
Given that the Government, home workers, home workers' representatives and home workers' employers all realise that the schemes are difficult to implement, it is disappointing that the Inland Revenue cannot give proper clearance of fair estimate agreements so that both home workers and their employers can have some certainty that their agreements comply with the law, thus ensuring that they are not brought before an employment tribunal and that no enforcement notices are levied on them. Sadly, however, the Inland Revenue will not give that clearance for fair estimate agreements, although it does so before major transactions for large companies. There is thus uncertainty both for employees and employers as to whether a fair rate is being paid for the work.
A particular problem for the company to which I have referred is estimating the amount of compensation that might be payable to home workers under the Bill. Neither the company nor the workers have adequate records that would enable them to fill the gaps. In an intervention on my hon. Friend the Member for North-West Norfolk (Mr. Bellingham), I pointed out that the company estimated that it would take the Inland Revenue about five man years to calculate the amounts due to former employees. However, as there is no evidence to show how many hours were actually worked the process seems flawed.
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