Employment Bill [HL]

House of Commons

Session 2007 - 08
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Other Bills before Parliament

Employment Bill [HL]

Employment Bill [HL]
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6
Conciliation after bringing of proceedings
(1)
In the Employment Tribunals Act 1996 (c. 17), in section 18 (conciliation),
subsection (2A) is repealed.
(2)
In that Act, in section 19 (conciliation procedure), subsection (2) is repealed.
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Compensation for financial loss
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(1)
In the Employment Rights Act 1996 (c. 18), in section 24 (determination of
complaints relating to deductions from wages or payments to employer)—
(a)
the existing provision becomes subsection (1), and
(b)
after that provision there is inserted—
“(2)
Where a tribunal makes a declaration under subsection (1), it
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may order the employer to pay to the worker (in addition to any
amount ordered to be paid under that subsection) such amount
as the tribunal considers appropriate in all the circumstances to
compensate the worker for any financial loss sustained by him
which is attributable to the matter complained of.”
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(2)
In that Act, in section 163 (determination of questions relating to redundancy
payments), at the end there is inserted—
“(5)
Where a tribunal determines under subsection (1) that an employee has
a right to a redundancy payment it may order the employer to pay to
the worker such amount as the tribunal considers appropriate in all the
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circumstances to compensate the worker for any financial loss
sustained by him which is attributable to the non-payment of the
redundancy payment.”
National minimum wage etc
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Arrears payable in cases of non-compliance
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(1)
In the National Minimum Wage Act 1998 (c. 39), section 17 (which makes
provision for the additional remuneration to which a worker is entitled in cases
of non-compliance) is amended as specified in subsections (2) to (5).
(2)
In subsection (1), after “shall” there is inserted “at any time (“the time of
determination”)”.
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(3)
In that subsection, for “the amount described in subsection (2) below” there is
substituted “whichever is the higher of—
(a)
the amount described in subsection (2) below, and
(b)
the amount described in subsection (4) below.”
(4)
In subsection (2) for “That amount” there is substituted “The amount referred
35
to in subsection (1)(a) above”.

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(5)
After subsection (3) there is inserted—
“(4)
The amount referred to in subsection (1)(b) above is the amount
determined by the formula—

where—
A is the amount described in subsection (2) above,
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R1 is the rate of national minimum wage which was payable in
respect of the worker during the pay reference period, and
R2 is the rate of national minimum wage which would have been
payable in respect of the worker during that period had the rate
payable in respect of him during that period been determined
10
by reference to regulations under section 1 and 3 above in force
at the time of determination.
(5)
Subsection (1) above ceases to apply to a worker in relation to any pay
reference period when he is at any time paid the additional
remuneration for that period to which he is at that time entitled under
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that subsection.
(6)
Where any additional remuneration is paid to the worker under this
section in relation to the pay reference period but subsection (1) above
has not ceased to apply in relation to him, the amounts described in
subsections (2) and (4) above shall be regarded as reduced by the
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amount of that remuneration.”
(6)
In the Agricultural Wages Act 1948 (c. 47), in section 3A(3A) (application of
section 17 of the National Minimum Wage Act 1998 for the purposes of
agricultural wages legislation in England and Wales)—
(a)
in paragraph (a), in the substituted subsection (2)—
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(i)
for “That amount” there is substituted “The amount referred to
in subsection (1)(a) above”;
(ii)
for “under this Act” there is substituted “under the Agricultural
Wages Act 1948”;
(b)
after paragraph (b) there is inserted—
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“(c)
for subsection (4) there shall be substituted—
    “(4)
The amount referred to in subsection (1)(b) above is the
amount determined by the formula—

where—
A is the amount described in subsection (2) above,
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R1 is the minimum rate applicable under the
Agricultural Wages Act 1948 in respect of the worker
during the pay reference period, and
R2 is the minimum rate which would have been
applicable under that Act in respect of the worker
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during the pay reference period had the minimum
rate applicable under that Act in respect of the worker

Employment Bill [HL]
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during that period been determined by reference to
any order under section 3(1)(a) of that Act in force at
the time of determination.””
(7)
Nothing in subsections (2) to (5) affects section 17 of the National Minimum
Wage Act 1998 (c. 39) as it has effect for the purposes of—
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(a)
the Agricultural Wages (Scotland) Act 1949 (c. 30), or
(b)
the Agricultural Wages (Regulation) (Northern Ireland) Order 1977 (SI
1977/2151) (N.I.22).
(8)
The amendments made by this section apply in relation to a pay reference
period (within the meaning of the National Minimum Wage Act 1998) ending
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before, as well as after, this section comes into force.
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Notices of underpayment
(1)
In the National Minimum Wage Act 1998, for sections 19 to 22F there is
substituted—
“19
Notices of underpayment: arrears
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(1)
Subsection (2) below applies where an officer acting for the purposes of
this Act is of the opinion that, on any day (“the relevant day”), a sum
was due under section 17 above for any one or more pay reference
periods ending before the relevant day to a worker who at any time
qualified for the national minimum wage.
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(2)
Where this subsection applies, the officer may, subject to this section,
serve a notice requiring the employer to pay to the worker, within the
28-day period, the sum due to the worker under section 17 above for
any one or more of the pay reference periods referred to in subsection
(1) above.
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(3)
In this Act, “notice of underpayment” means a notice under this section.
(4)
A notice of underpayment must specify, for each worker to whom it
relates—
(a)
the relevant day in relation to that worker;
(b)
the pay reference period or periods in respect of which the
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employer is required to pay a sum to the worker as specified in
subsection (2) above;
(c)
the amount described in section 17(2) above in relation to the
worker in respect of each such period;
(d)
the amount described in section 17(4) above in relation to the
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worker in respect of each of such period;
(e)
the sum due under section 17 above to the worker for each such
period.
(5)
Where a notice of underpayment relates to more than one worker, the
notice may identify the workers by name or by description.
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(6)
The reference in subsection (1) above to a pay reference period includes
(subject to subsection (7) below) a pay reference period ending before
the coming into force of this section.
(7)
A notice of underpayment may not relate to a pay reference period
ending more than six years before the date of service of the notice.
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(8)
In this section and sections 19A to 19C below “the 28-day period”
means the period of 28 days beginning with the date of service of the
notice of underpayment.
19A
Notices of underpayment: financial penalty
(1)
A notice of underpayment must, subject to this section, require the
5
employer to pay a financial penalty specified in the notice to the
Secretary of State within the 28-day period.
(2)
The Secretary of State may by directions specify circumstances in which
a notice of underpayment is not to impose a requirement to pay a
financial penalty.
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(3)
Directions under subsection (2) may be amended or revoked by further
such directions.
(4)
The amount of any financial penalty is, subject as follows, to be 50% of
the total of the amounts referred to in subsection (5) below.
(5)
Those amounts are the amounts specified under section 19(4)(c) above
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for all workers to whom the notice relates in respect of pay reference
periods specified under section 19(4)(b) above which commence after
the coming into force of this section.
(6)
If a financial penalty as calculated under subsection (4) above would be
less than £100, the financial penalty specified in the notice shall be that
20
amount.
(7)
If a financial penalty as calculated under subsection (4) above would be
more than £5000, the financial penalty specified in the notice shall be
that amount.
(8)
The Secretary of State may by regulations—
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(a)
amend subsection (4) above so as to substitute a different
percentage for the percentage at any time specified there;
(b)
amend subsection (6) or (7) above so as to substitute a different
amount for the amount at any time specified there.
(9)
A notice of underpayment must, in addition to specifying the amount
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of any financial penalty, state how that amount was calculated.
(10)
In a case where a notice of underpayment imposes a requirement to pay
a financial penalty, if the employer on whom the notice is served,
within the period of 14 days beginning with the day on which the notice
was served—
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(a)
pays the amount required under section 19(2) above, and
(b)
pays at least half the financial penalty,

he shall be regarded as having paid the financial penalty.
(11)
A financial penalty paid to the Secretary of State pursuant to this
section shall be paid by the Secretary of State into the Consolidated
40
Fund.
19B
Suspension of financial penalty
(1)
This section applies in any case where it appears to the officer serving
a notice of underpayment which imposes a requirement to pay a
financial penalty that—
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Employment Bill [HL]
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(a)
relevant proceedings have been instituted; or
(b)
relevant proceedings may be instituted.
(2)
In this section “relevant proceedings” means proceedings against the
employer for an offence under section 31(1) below in relation to a
failure to remunerate any worker to whom the notice relates for any
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pay reference period specified under section 19(4)(b) above in relation
to that worker.
(3)
The notice of underpayment may contain provision suspending the
requirement to pay the financial penalty payable under the notice until
a notice terminating the suspension is served on the employer.
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(4)
An officer acting for the purposes of this Act may serve on the employer
a notice terminating the suspension (“a penalty activation notice”) if it
appears to the officer—
(a)
in a case referred to in subsection (1)(a) above, that relevant
proceedings have concluded without the employer having been
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convicted of an offence under section 31(1) below, or
(b)
in a case referred to in subsection (1)(b) above—
(i)
that relevant proceedings will not be instituted; or
(ii)
that relevant proceedings have been concluded without
the employer having been convicted of an offence under
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section 31(1) below.
(5)
Where a penalty activation notice is served, the requirement to pay the
financial penalty has effect as if the notice of underpayment had been
served on the day on which the penalty activation notice was served.
(6)
An officer acting for the purposes of this Act must serve on the
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employer a notice withdrawing the requirement to pay the financial
penalty if it appears to the officer that, pursuant to relevant
proceedings, the employer has been convicted of an offence under
section 31(1) below.
19C
Notices of underpayment: appeals
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(1)
A person on whom a notice of underpayment is served may in
accordance with this section appeal against any one or more of the
following—
(a)
the decision to serve the notice;
(b)
any requirement imposed by the notice to pay a sum to a
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worker;
(c)
any requirement imposed by the notice to pay a financial
penalty.
(2)
An appeal under this section lies to an employment tribunal.
(3)
An appeal under this section must be made before the end of the 28-day
40
period.
(4)
An appeal under subsection (1)(a) above must be made on the ground
that no sum was due under section 17 above to any worker to whom the
notice relates on the day specified under section 19(4)(a) above in
relation to him in respect of any pay reference period specified under
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section 19(4)(b) above in relation to him.

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(5)
An appeal under subsection (1)(b) above in relation to a worker must
be made on either or both of the following grounds—
(a)
that, on the day specified under section 19(4)(a) above in
relation to the worker, no sum was due to the worker under
section 17 above in respect of any pay reference period specified
5
under section 19(4)(b) above in relation to him;
(b)
that the amount specified in the notice as the sum due to the
worker is incorrect.
(6)
An appeal under subsection (1)(c) above must be made on either or
both of the following grounds—
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(a)
that the notice was served in circumstances specified in a
direction under section 19A(2) above, or
(b)
that the amount of the financial penalty specified in the notice
of underpayment has been incorrectly calculated (whether
because the notice is incorrect in some of the particulars which
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affect that calculation or for some other reason).
(7)
Where the employment tribunal allows an appeal under subsection
(1)(a) above, it must rescind the notice.
(8)
Where, in a case where subsection (7) above does not apply, the
employment tribunal allows an appeal under subsection (1)(b) or (c)
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above—
(a)
the employment tribunal must rectify the notice, and
(b)
the notice of underpayment shall have effect as rectified from
the date of the employment tribunal’s determination.
19D
Non-compliance with notice of underpayment: recovery of arrears
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(1)
If a requirement to pay a sum to a worker contained in a notice of
underpayment is not complied with in whole or in part, an officer
acting for the purposes of this Act may, on behalf of any worker to
whom the requirement relates—
(a)
present a complaint under section 23(1)(a) of the Employment
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Rights Act 1996 (deductions from worker’s wages in
contravention of section 13 of that Act) to an employment
tribunal in respect of any sums due to the worker by virtue of
section 17 above; or
(b)
in relation to Northern Ireland, present a complaint under
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Article 55(1)(a) of the Employment Rights (Northern Ireland)
Order 1996 (deductions from worker’s wages in contravention
of Article 45 of that Order) to an industrial tribunal in respect of
any sums due to the worker by virtue of section 17 above; or
(c)
commence other civil proceedings for the recovery, on a claim
40
in contract, of any sums due to the worker by virtue of section
17 above.
(2)
The powers conferred by subsection (1) above for the recovery of sums
due from an employer to a worker shall not be in derogation of any
right which the worker may have to recover such sums by civil
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proceedings.
19E
Non-compliance with notice of underpayment: recovery of penalty
A financial penalty payable under a notice of underpayment—

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(a)
in England and Wales, is recoverable, if a county court so
orders, under section 85 of the County Courts Act 1984 or
otherwise as if it were payable under an order of that court;
(b)
in Scotland, may be enforced in the same manner as an extract
registered decree arbitral bearing a warrant for execution issued
5
by the sheriff court of any sheriffdom in Scotland;
(c)
in Northern Ireland, is recoverable, if the county court so
orders, as if it were payable under an order of that court.
19F
Withdrawal of notice of underpayment
(1)
Where a notice of underpayment has been served (and not already
10
withdrawn or rescinded) and it appears to an officer acting for the
purposes of this Act that the notice incorrectly includes or omits any
requirement or is incorrect in any particular, the officer may withdraw
it by serving notice of the withdrawal on the employer.
(2)
Where a notice of underpayment is withdrawn and no replacement
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notice of underpayment is served in accordance with section 19G
below—
(a)
any sum paid by or recovered from the employer by way of
financial penalty payable under the notice must be repaid to
him with interest at the appropriate rate running from the date
20
when the sum was paid or recovered;
(b)
any appeal against the notice must be dismissed;
(c)
after the withdrawal no complaint may be presented or other
civil proceedings commenced by virtue of section 19D above in
reliance on any non-compliance with the notice before it was
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withdrawn;
(d)
any complaint or proceedings so commenced before the
withdrawal may be proceeded with despite the withdrawal.
(3)
In a case where subsection (2) above applies, the notice of withdrawal
must indicate the effect of that subsection (but a failure to do so does
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not make the withdrawal ineffective).
(4)
In subsection (2)(a) above, “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.
19G
Replacement notice of underpayment
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(1)
Where an officer acting for the purposes of this Act serves a notice of
withdrawal under section 19F above and is of the opinion referred to in
section 19(1) above in relation to any worker specified in the notice
which is being withdrawn (“the original notice”), he may at the same
time serve another notice under section 19 above (“the replacement
40
notice”).
(2)
The replacement notice may not relate to any worker to whom the
original notice did not relate.
(3)
If the replacement notice contravenes subsection (2) above, that fact
shall be an additional ground of appeal for the purposes of section 19C
45
above.