EFFECTS OF THE BILL ON PUBLIC EXPENDITURE AND PUBLIC SERVICE MANPOWER

108.     The Bill should have no significant effects on central government expenditure or public service manpower. Further non-legislative reforms are being made to workplace dispute resolution, involving changes to the provision on advice and conciliation services.

SUMMARY OF THE REGULATORY IMPACT ASSESSMENT

109.     Impact Assessments on enforcement of the NMW and Employment Agency Standards, CFAVs and trade union membership have been published and take account of the major costs and benefits of the proposed legislation in those specific policy areas. We do not consider that any significant costs are thereby imposed on business. The provisions on enforcement of the NMW and Employment Agency Standards do not change the requirements for compliance with the relevant legislation. Compliant employers and agencies will therefore not incur additional costs. The provisions on CFAVs enable the Cadet Forces to continue to operate in their current form and only affect the Cadet Forces and the Ministry of Defence. The provisions on trade union membership will impact on unions and their members and will have no significant effect on business. An Impact Assessment setting out the costs and benefits of the Dispute Resolution provisions was published on 6th February 2008 and shows that the Government assesses that there will be significant savings to business as a result of the measures contained within this Bill, and associated new support services to be provided by Acas. The Impact Assessment is available in the Vote Office and can also be accessed on the Department for Business, Enterprise and Regulatory Reform's website:

http://www.berr.gov.uk/employment/employment-legislation/employment-bill/index.html

EUROPEAN CONVENTION ON HUMAN RIGHTS

110.     Section 19 of the Human Rights Act 1998 requires the Minister in charge of a Bill in either House of Parliament to make a statement about the compatibility of the provisions of the Bill with the ECHR (as defined by section 1 of that Act). Pat McFadden has made the following statement:

"In my view the provisions of the Employment Bill are compatible with the Convention rights."

111.     Clause 4 provides for changes to sections 7(3A) and 7(3AA) of ETA 1996 to prepare for the introduction of a procedure for determining certain employment tribunal proceedings without an oral hearing (see paragraphs 26 to 28). The Government considers that this clause is likely to engage and be compatible with Article 6 ECHR because such a procedure will only be available where all parties to a case have consented in writing. Moreover, rights under this Article, including the right to a hearing, can generally be waived unless there is compulsion.

112.     Clause 5 makes changes to section 18 of ETA 1996, which sets out the duties and powers of Acas to conciliate through its conciliation officers in employment disputes. This clause replaces Acas's duty to conciliate in certain circumstances with a wide discretionary power (see paragraphs 29 to 31). The Government considers that Article 6 is unlikely to be engaged because the exercise of this power would not amount to a determination of a dispute over recognised rights. However, even if this Article is engaged, the Government considers that this clause is likely to comply with its civil limb. This is because of the availability of judicial review, which would provide an appropriate safeguard in this type of situation in ensuring compliance with Article 6.

113.     Clause 8 makes changes to section 17 of NMWA 1998. This clause changes the basis of a worker's entitlement to arrears of the NMW. Arrears will be the higher of either: the difference between the remuneration received by the worker and the NMW rate which was in force at the time that he should have been paid; or the amount of the underpayment divided by the NMW rate applicable at the time of the underpayment, multiplied by the NMW rate applicable at the time the arrears are determined (see paragraphs 45 to 50). It is probable that clause 8 will be within the ambit of A1P1, to the extent that the legal requirement to pay a minimum wage establishes a minimum which is more than the employer would otherwise have paid, therefore depriving him of his assets. In the Government's view, this interference is likely to be compatible with A1P1 because it is in the public interest, striking a fair balance between the competing interests. The measure is also proportionate, in that there is interference with the employer's possessions only to the extent of taking into account the degree of his non-compliance with the legislation. Clause 8 operates with retrospective effect. However, this does not engage Article 7 ECHR because it does not concern a criminal charge.

114.     Clause 9 provides for changes to NMWA 1998, replacing the existing enforcement and penalty notices with a new single notice of underpayment. The notice must require the employer to pay a financial penalty unless the Secretary of State has stipulated otherwise (see paragraphs 51 to 67). The penalty might engage A1P1 rights. The Government considers that it is likely to be compatible because it is in the public interest, striking a fair balance between competing rights primarily in protecting vulnerable workers and as a corollary in ensuring that non-compliant employers do not obtain a competitive advantage over compliant ones. The penalty is directly proportionate to the level of an employer's non-compliance, to the extent that it is calculated by reference to a proportion (set at 50%) of the amount of arrears owed. Furthermore, once calculated, the penalty may be adjusted to be no less than £100 and no more than £5,000, in order to ensure that the penalty is meaningful and not excessive. The Government also considers that the financial penalty should be regarded as imposing a civil obligation for the purposes of Article 6. The Government considers that this clause is compatible with Article 6, given that it provides for a right of appeal to an employment tribunal.

115.     Clause 10 provides that officers appointed under NMWA 1998 have the power to remove records required to be kept or preserved under that legislation in order to take copies of them (see paragraphs 68 to 71). It is likely that A1P1 rights will be engaged, since this clause will deprive employers of their possessions, albeit temporarily. However, in the Government's view, this clause is justified in the public interest in that the copying away from the premises will be used for the prevention or detection of a crime and for the protection of the rights of others. The power strikes a fair balance between the competing interests, as it is restricted to those records required to be kept or preserved under the legislation, and is limited in duration, as the records must be returned by officers as soon as reasonably practicable.

116.     Clause 11 makes changes to section 31 of NMWA 1998 so that the summary offences will become triable either way. In the Government's view, this clause does not engage any convention rights, as does not have retrospective effect.

117.     Clause 12 makes changes to the Finance Act 2007 in order to apply investigation powers, and accompanying safeguards, to investigations by HMRC of criminal offences under NMWA 1998 (see paragraphs 74 to 76). These powers engage Articles 5 and 8. However, the Government considers these powers are compatible with these Articles because the powers are necessary and proportionate for the purpose of deterring and punishing the most serious cases of non-compliance under NMWA 1998. Arrest powers, and subsequent detention, will be in accordance with the Police and Criminal Evidence Act 1984 and its Codes of Practice, ensuring that the various requirements of Article 5 are complied with at all times. The Government considers that the powers to search and require the production of documentation are necessary and proportionate in a democratic society.

118.     Clause 15 makes changes to EAA 1973 so that certain summary offences become triable either way. In the Government's view, this clause does not engage any convention rights, as it does not have retrospective effect.

119.     Clause 16 makes changes to EAA 1973 in order to strengthen the powers of inspection for inspectors appointed under section 9 of EAA 1973 (see paragraphs 87 to 94). The Government considers that this clause engages and is compatible with Article 8 because the powers serve the legitimate aims of protecting the rights and freedom of others and helping to prevent crime; they are proportionate, since they are limited in scope, and subject to the existing legislative framework, which includes meeting the requirements of the Data Protection Act 1998.

120.     A1P1 rights may be engaged in that clause 16 allows records and documents inspected by inspectors under EAA 1973 to be removed in order to be copied (see paragraph 93). However, the Government considers such interference to be justified because of the need to protect the general public and vulnerable workers through the use of this power, which has a light touch and temporary impact on property rights, as these records and documents are circumscribed and must be returned as soon as reasonably practicable.

121.     Clause 16 makes changes to the criminal offences under section 9 of EAA 1973. In the Government's view, these criminal offences engage and are compatible with Article 6 rights, since they fall into a category of offences which do not give rise to potential interference with a person's right to silence and right against self-incrimination.

122.     The Government has also considered that the new powers of inspection under clause 16 engages Article 6. However, the Government considers them to be compatible with this Article because EAA 1973 does not compel a person to make a statement under compulsion and ensures that evidence regarding statements is admissible in accordance with recognised procedural safeguards.

123.     Clause 18 makes changes to sections 174 and 176 of TULRCA 1992, to give effect to the European Court of Human Rights Judgment, Aslef v UK. The Government considers that clause 18 complies with this Judgment and is therefore compatible with Articles 10 and 11 of the ECHR.