Barry
Gardiner: I see the point of the hon.
Gentleman’s remarks. Clearly, however, one could then get into a
situation in which the officers go in to copy documents, if that is
possible, but when they ask for use of the photocopier, there is
obstruction on the part of the employer, who says, “No,
I’m sorry, you’re not going to use my
photocopier,” or, “I’m going to charge you
£1.20 a copy,” or whatever.
All that such
an amendment would do is put in place another obstacle that would
become a point of dispute between the officers and the employers. I
thought that the whole thrust of what the Committee wanted to do was to
simplify things and get certainty. In that sense, it is much better
that the powers should be as they currently appear in the
Bill.
Mr.
Djanogly: I understand the hon. Gentleman’s point,
but it is not in tune with the reality. In the past, I have been
involved in advising companies on the outcome of Office of Fair Trading
raids, for instance, and know that the impact of removing documents,
even if at an
investigatory stage when no charges have been made, can be devastating
to a company’s business. I am not claiming that there will not
be situations in which that will not be the correct way to go ahead. He
mentioned the example of companies making it difficult to get access to
the photocopier. If the company was making it difficult, the documents
should be taken away, but my concern in that regard is that the
starting point is that there should be as little disruption as
possible. I am not sure that the clause, as drafted, would ensure that
that is the case. We could improve the
drafting.
Barry
Gardiner: Does the hon. Gentleman accept that what he has
just said is not what his amendment says? His amendment would simply
insert “if
copying facilities are not available at that
place”. They
might be available at the place, but they might be charged for at an
exorbitant rate. Officers might be refused access to those copying
facilities. What his amendment proposes is not the reasonable point of
discussion that he has
made.
Mr.
Djanogly: I accept the hon. Gentleman’s assertion
that the drafting is not all that it could be, which is probably why I
announced it to be a probing amendment. I am making a point of
principle, because I think that this could be like using a
sledge-hammer to crack a
nut.
Dr.
Palmer: Does the hon. Gentleman accept that the clause
does not stipulate that officers are compelled to remove documents? If
copies are instantly made available at no cost, it is quite possible
that they could accept
those.
Mr.
Djanogly: I accept that, but the reality is that if the
enforcing officers are given the powers, they will often use them. It
is incumbent on us, as legislators, to ensure that we minimise the
disruption.
John
Hemming: Although we share the concerns of the hon. Member
for Brent, North about the drafting of the amendment, we want the Bill
to reflect the principle that people operating on behalf of the state
have the powers to do only what is necessary, rather than allowing them
to take any documents from anywhere. The principle is a good one, but
the drafting needs a bit of
work.
Mr.
Binley: May I refer to the reality of the situation when
the inspector calls? Hon. Members do not need me to remind them just
how many inspectors can call on small businesses—VAT inspectors,
those looking at health and safety at work and a number of others
spring to mind. In many instances, they create in small businesses a
feeling of fear, and certainly great apprehension. We need to be very
careful about the power with which we endow inspectors, specifically
with regard to businesses run by members of our ethnic communities.
Often they are not fully versed in the English language and have a
sizable fear, brought with them from the culture of their countries, of
inspectors who call. That needs to be taken into account much more in
this respect.
The wording
of the clause is imperfect. There is a vagary about the term
“copy records”, about which the Minister might like to
reassure us. I know that the term
“records
must be returned as soon as reasonably practicable”
is a legal phrase, but
it is as lose a legal phrase as one can get. The Minister and I both
know that sometimes the arm of bureaucracy is used to instil fear and
apprehension. That concerns me enormously.
The
Chairman: Order. What concerns the hon. Gentleman is
naturally a concern to many people, but I gently say to him that the
sentiments he is expressing relate to the clause and therefore
potentially, if there is to be one, to the clause stand part debate.
Sadly, his comments do not relate to the amendment. On that basis, I
feel confident that he is about to draw his remarks to a
close.
Mr.
Binley: You are absolutely right, Mr. Bercow,
to bring me to the matter that I really want to talk about, which is
the amendment itself, but you will appreciate that I had to create the
colour first.
The truth of
the matter is that we should do everything possible to ensure that
inspectors do not remove documents that small business men might need
to work on once the apprehension is planted in their minds that they
could well face a bureaucratic—indeed, legal—problem. The
return of those documents as soon as is reasonably practicable leaves
open a problematic issue that we need to attend to with more
certainty. I
support the amendment because if it is practically possible to copy
documents, it should be right and proper to do so. However, equally, I
want the Minister to take account—I will refer to this matter in
the stand part debate—of the looseness of the wording in that
respect. For those reasons, I support the
amendment.
Mr.
McFadden: Given what you have just said, Mr.
Bercow, I am wary of setting out any context for my response. However,
the context is important because we are not dealing with a new law; we
are dealing with something that has been in place for 10 years and has
become a familiar part of the labour market. Clauses 9 to 12 all relate
to stronger enforcement of the minimum wage and context is important
because we have 10 years of experience of how it operates. Most
employers are perfectly willing to pay the minimum wage and treat their
workers completely fairly, and when we discuss the policing and rules
around those who do not, it is important to acknowledge that.
The hon.
Member for Northampton, South referred to when the inspector calls.
Sometimes minimum wage enforcement is criticised from the different
direction of the inspector not calling enough—people do say
that. It is important to make it clear to the Committee that the
inspectors work in two ways. One way is in direct response to reports
of non-payment of the minimum wage. That would be investigated and
inspectors may visit a premises and so on. The other way they work is
proactively on what we call risk-based inspection. We know that that is
more likely to take place in certain sectors than others and that
certain employers might have a track record in other areas. In a world
of finite resources, we target the resources we have as well as we
can. On
the amendment, of course, given that most employers are decent people,
it will not be necessary to take records away. The current powers of
the officers, who enforce the minimum wage by requiring the employer to
produce records for inspection and copying them on the employer’s
premises, are sufficient in the vast majority of cases. However, if an
employer does not agree to the removal of such records, officers do not
have the right to remove them to make copies. I agree with my hon.
Friend the Member for Brent, North that the problem with the amendment
is that it makes the question about the existence of the photocopying
facilities the key point, when it is not. The key point is the
co-operation of the
employer. Mary
Creagh (Wakefield) (Lab): Does my hon. Friend agree that
in most companies that operate any sort of payroll facility, however
basic, it will most likely be done, and should be done, through a
computerised system in the interests of good record keeping? In the
event of copies being removed from premises, the employer is very
likely to have some form of copy or record available on a
computer.
Mr.
McFadden: My hon. Friend is right. Let us remember that
the penalty regime, which was dealt with in clause 9, has increased for
employers. A non-compliant employer who is underpaying will know that
they are liable for an earlier and bigger penalty than under the
current rules. The co-operation of the employer is key, not the
existence of photocopying facilities, because it is quite possible for
those to exist, but for the employer to say, “Well, we have it,
but you can’t use it.” In those circumstances, we would
have delays and so
on. The
hon. Gentleman, who is a very decent and honourable man, quite rightly
raised the point about proportionality. The powers in clause 10 would
be used only in that small minority of cases where enforcement officers
cannot complete the review on the employer’s premises and where
the employer refuses to allow them to remove the
records.
Mr.
Binley: I thank the Minister for his remarks, and of
course I understand much of what he is saying. However, will he comment
on the line in the clause about how records should be
returned “as
soon as reasonably
practicable”? I
know that that is rightly part of the stand part debate, but will he
comment on that, if the Chairman allows him to? Timing is
important.
The
Chairman: Order. The Minister will have every opportunity
to comment in the clause stand part debate, which might
follow. 12.45
pm
Mr.
McFadden: I shall obey the Chairman’s wise guidance
and perhaps return to that point during the debate on the
clause.
I do not feel
that amendment No. 15 would deal with the issue of the co-operation of
the employer. One of the things raised with us time and time again is
that we are dealing here with vulnerable workers who very often are
fearful of reporting. We are also dealing with a system where—we
will discuss this in later clauses—currently, without the
clauses that we are about to discuss, prosecution is often dependent on
the willingness of a vulnerable and often fearful worker to testify in
person. The provisions are all about enabling enforcement
without always being dependent on such a worker coming forward. The
examination of the records, particularly in the context of whether an
employer is being obstructive, is a necessary part of that process,
which is why I do not agree with the amendment—I am
afraid—and hope that the hon. Gentleman will withdraw
it. Mr.
Djanogly: The Minister just said that we are dealing with
vulnerable workers. In some clauses, that is the case, but not in
clause 10, which deals with authorities raiding what might be
vulnerable companies. That is the issue with which we are dealing. We
have raised our concerns about the fact that in some situations the
authorities might not give adequate thought to the needs of the ongoing
business of the company from which they are taking documents, probably
in some kind of raid. I have heard the Minister try to explain why that
is necessary, and I accept that the wording of the amendment is not
perfect, which is why I shall not press it to a vote now. However, we
will reconsider that point, and in the stand part debate I shall
address related
circumstances.
Mary
Creagh: The hon. Gentleman said that he advised companies
on dealing with the consequences of DTI raids. Presumably he would have
talked to them about their risk management. Did he ever come across any
companies that only had a single copy of their records? If so, would he
have advised them of the risk they were taking in the event of a fire,
flood or some such accident where those records got
lost?
Mr.
Djanogly: First, the answer to your question is probably
yes.
The
Chairman: Order. I did not ask any
question.
Mr.
Djanogly: The answer to the hon. Lady’s question is
probably yes. The largest companies often do not keep multiple copies
of their records. More importantly, it is the smaller companies who
probably would not be able to afford legal advice or would not even
think of going for legal advice in relation to what they should have in
the event of authorities raiding them. Those smaller companies are the
companies that are most likely to be negatively affected by these
provisions. Small companies often do not have the resources to take
multiple copies of documents. They are surviving hand to mouth and
perhaps may do their paperwork every quarter when they have to do their
VAT return or whatever. That is the reality of small businesses. We
still maintain that, as drafted, the clause could be a sledgehammer to
crack a
nut.
Mr.
McFadden: I do not want to prolong this any more than is
necessary, but I want to take issue with the hon. Gentleman’s
comment at the opening of his remarks that the clause was not dealing
with a situation involving vulnerable workers. It most certainly is. We
may have a situation, as sometimes we do, where vulnerable workers are
fearful of reporting the non-payment of the minimum wage and
prosecutions that would otherwise take place cannot take place because
we have not given the inspectors the necessary powers to enforce the
law. That most certainly involves vulnerable workers. In all the
clauses relating to the minimum wage we are most certainly dealing with
some of the most vulnerable workers in the
country.
Mr.
Djanogly: I do not accept that. I am not arguing against
enforcement. In fact, I am going to argue later that enforcement should
be improved. I am not arguing even that raids should not happen where
they are appropriate. I am simply saying that the clause as drafted
does not give enough leeway for the reality of the circumstances that
may exist for companies that are wholly innocent at the time they are
raided. The downside of that could be very significant. We have covered
the point. We will look at this again. On that basis, I beg to ask
leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Clause
10 ordered to stand part of the
Bill.
Clause
11Offences:
mode of trial and
penalties Question
proposed, That the clause stand part of the
Bill.
Mr.
McFadden: I just want to draw the Committee’s
attention to one or two points in this clause. It relates to the
mechanism by which criminal offences under the National Minimum wage
Act 1998 can be tried. Criminal offences already exist under that Act
so this does not create new criminal offences, but it relates to the
overall strengthening of the penalty regime which we have just heard
that the Conservative party supports. The overwhelming majority of
cases of non-compliance with the minimum wage have been dealt with
under the civil law. That will continue to be the case under the new
regime proposed in the
Bill. The
national minimum wage is enforced under current arrangements by Her
Majesty’s Revenue and Customs. As I said, that is initiated
either by a complaint from workers or through risk assessment,
including targeted enforcement at low paying sectors. An HMRC
enforcement officer will visit the employer, interview the employer and
the workers, check the employer’s national minimum wage records
and so on. The vast majority of cases are resolved with the employer
repaying arrears to workers who have been underpaid, which we have
discussed. It is only in cases in which Her Majesty’s Revenue
and Customs cannot achieve payment of arrears to workers that the issue
and enforcement notice requiring the employer to repay the arrears
takes effect. Let me give the Committee some figures. In 2007-08, HMRC
investigated 4,500 cases. It found non-compliance in 1,649 cases. Of
those, 96 per cent. were settled without the need to issue an
enforcement notice and HMRC had to resort to the formal mechanism of
issuing notices in only a small number of
cases. Clause
9 changes the enforcement notice process. Following recommendations
from the Low Pay Commission, we also want to make changes in other
areas, too. I want to talk about the criminal sanctions that are
affected by the changes that we propose in clause 11. The National
Minimum Wage Act provides for a number of criminal
offences—deliberately paying below the minimum wage, failing to
keep minimum wage records or keeping false records and obstructing
enforcement officers. Currently, such offences can be tried only in a
magistrates court in which the maximum fine is £5,000. Criminal
conduct by employers is the exception rather than the rule.
As well as
considering how we need to strengthen the enforcement regime with the
penalties under the civil law, we also considered whether the sanctions
for the criminal offences were sufficient. We concluded that in order
to ensure a balanced spectrum of enforcement, the potential fine
available to a criminal court when sentencing for an offence should be
greater than the maximum penalty that can be imposed by notice of
underpayment. Secondly, HMRC’s investigative powers, which we
believe are necessary and are proposed in clause 12, could not be used
if the offences remained triable only as summary offences in the
magistrates courts. The clause is important on its own and in relation
to clause
12.
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