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Alan Johnson: Let me explain the six-year, three-year issue as best I can. The hon. Member for North-West Norfolk (Mr. Bellingham) asked whether we had statistics on how many cases went through sheriff courts in Scotland, compared with employment tribunals. I have to say that I am disappointed with the quality of the statistics that we are getting. However, of those enforcement cases that the Inland Revenue takes on behalf of employees, some 85 per cent. go through the county court and some 15 per cent. go to employment tribunals.
I am not sure how many cases are pursued individually, through trade unions or by people themselves, and what is the breakdown of the relevant figures. I am, however, clear that most cases go through the county courts for the reason that the hon. Gentleman mentioned, which is that people cannot go to an employment tribunal if it is more three months since the last underpayment. On Second Reading we briefly discussed the fact that people can get 8 per cent. interest on a claim through the county court, which they cannot get through an employment tribunal claim. That is as much as I can tell the hon. Gentleman.
I tried to find out from debates on the National Minimum Wage Bill in 1998 the rationale for requirement for records to be kept for three years. I think that it was intended that the provision tie in with other legislation requiring employers to keep records for that period. It was a question of consistency. Nevertheless, the hon. Gentleman is right to raise that issue. He said that that was academic, but it was not academic from April last year.
The national minimum wage was introduced in April 1999, so there was the possibility of claims going back three years from April 2002 onwards. An employee is entitled to claim arrears dating back six years if the claim is being enforced, but can claim arrears dating from however long ago if they do not go through enforcement officers and instead take their
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claim to an employment tribunal. That already applies to county courts. Sheriff courts in Scotland have a five-year limitation, and county courts in the United Kingdom have a six-year limitation. What we are saying through the Bill is that, when enforcement is carried out through the Inland Revenue, there should be consistency, and a period of six years.
The hon. Gentleman asked about the disparity between employers having to keep records for only three years, but arrears going back six years being enforceable. On Second Reading, when he argued that we should limit arrears to three years, I said that there was a better case for employers keeping record for six years than for reducing the arrears period. None the less, I shall consider the issue. The Bill will be the acid test, because this is a new experience—there have not been any cases of arrears going back more than three years being pursued. The average arrears go back less than a year. Usually, employers find out about arrears within a reasonable time and the matter is pursued.
I do not want to make a big song and dance about the issue if it will be academic, but we will consider what difficulties Inland Revenue enforcement officers have with the absence of records going back more than three years. I suspect, as the hon. Gentleman said, that there will be evidence about pay: employees will have payslips, because most are meticulous—as they should be—about keeping them for many years. Although most employers dump other records after three years, they may well keep records of pay. If a problem occurs, we might need to consider the issue—under the regulations, not the Bill—with a view to extending the requirement to keep records to more than three years.
The hon. Member for Twickenham (Dr. Cable) talked about the amendment that we accepted in the other place. The Opposition argued—and we, in the end, accepted—that the rules on enforcement for Inland Revenue acting on behalf of other people should be consistent with those for county courts and tribunals, as long as that did not remove the right of a person to claim arrears going back however far. It was felt that that was a sensible amendment, and I hope that the Committee leaves it in place.
Mr. Bellingham: On the rule relating to companies keeping records for three years, is that in company law statute, or is it based on case law? How easy would it be to change that requirement if it made sense to do so in future?
Alan Johnson: I shall write to the hon. Gentleman, because I am not sure about that. My understanding is that the requirement is part of the regulations, not the Bill, and that we could, therefore, change it without too many problems.
Question put and agreed to.
Clause 1 ordered to stand part of the Bill.
Clause 2
Short title, commencement and extent
Alan Johnson: I beg to move amendment No. 1, in
clause 2, page 2, line 14, leave out subsection (6).
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This is a technical amendment. It is unusual for me to move such an amendment. The subsection (6) was inserted in another place to avoid infringing the privileges of this House as regards charges on public funds. The amendment merely removes the provision.
Mr. Bellingham: The amendment makes sense, and we are happy to accept what the Minister says.
Amendment agreed to.
Question proposed, That the clause, as amended, stand part of the Bill.
9.15 am
Alan Johnson: Clause 2 provides that the Bill shall extend to Northern Ireland in addition to the remainder of the United Kingdom—that is the same arrangement as that in the 1998 Act. It also addresses the enforcement of the agricultural minimum wage in Scotland. The reason for that is that agriculture is devolved to Scotland and Northern Ireland and the agricultural minimum wage has been in place throughout the United Kingdom for more than half a century.
At present, schedule 2 to the 1998 Act makes several amendments to the Agricultural Wages (Scotland) Act 1949 to incorporate several provisions of the national minimum wage into the agricultural minimum wage. The Scottish Executive intend to lay before the Edinburgh Parliament independent, parallel legislation similar to the Bill, but covering only Scottish agriculture. The clause therefore ensures that the Bill's provisions will not be carried across to the 1949 Act. For the sake of total clarity, I tell the Committee that the clause does not affect the existing structure of the national minimum wage or agricultural wages legislation.
Although agriculture is also a devolved matter in Northern Ireland, the Committee will be aware that the Stormont Assembly is temporarily suspended. My Department has confirmed with the Northern Ireland Office that it is content for the Bill to cover agriculture in Northern Ireland.
Mr. Bellingham: We certainly support the clause, and I am grateful to the Minister for explaining technicalities regarding the devolved Assemblies.
Clause 2(2) says:
''The Act comes into force at the end of the period of two months beginning with the day on which it is passed.''
We talked about that on Second Reading, but I want to return to it because the Minister should be aware that the Bill relates to a vulnerable group of people. Will the Minister give the Committee an update on how many cases are currently on hold as a result of the Bebb decision? A figure of 250 was mentioned in another place, but that was a few months ago so I assume that the volume of cases on hold is building.
Obviously, people's entitlement will not be changed and they will receive interest on the outstanding amount. However, will the Minister explain why we must wait for two months after the Bill receives Royal Assent before it comes into force? There are plenty of precedents of Bills coming into force immediately after receiving Royal Assent. I remind him that in recent
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years, the Education Act 2002, the Anti-terrorism, Crime and Security Act 2001, the Armed Forces Discipline Act 2000 and the Freedom of Information Act 2000 all came into force immediately.
The Statute Law Society examined 105 Acts that were passed in the 14 months between January 1978 and April 1979. It found that 41 Acts came into force on the exact day on which they were passed. Twelve Acts came into force on a date specified in those Acts, which is fair enough because some Acts specify a future date. Only 14 Acts came into force after the expiry of two months.
On Second Reading, the Minister did not convince Opposition Members about the two-month period. This mini Bill is designed to correct a decision that the Government rightly thought was wrong and that we all thought removed an important provision on entitlement in the original legislation.
As I mentioned, the relevant people have been poorly treated and they are a vulnerable group of workers on low pay. Although people's ultimate entitlement will not be compromised, a two-month wait is a long time for them. They might be in another low-paid job, or out of work, so they will be looking forward to receiving their just dues. Why should they wait? That does not make sense. There is no reason why the Bill cannot come into effect immediately, unless the Minister can explain why, if it did come into effect, it would set some form of precedent or lead to technical difficulties.
Annabelle Ewing (Perth): The Scottish National party supports clause 2. I seek one clarification, however. It is not related directly to the comments of the hon. Member for North-West Norfolk, but it arises from them.
The Inland Revenue is still appealing against the ruling of the tribunal. If it wins that appeal, will the Minister say whether there will be danger of confusion, given that, in effect, the courts would be saying that the original Act allowed the Inland Revenue to proceed in the way facilitated by the Bill. As a result, that will be how the 1998 Act will be interpreted and there might be confusion about the Bill. Will the Minister clarify the matter?
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