Employment Bill [Lords]
Mr. Swire: Would the Minister tell the Committee, for interest, the geographical spread of those prosecutions?
Mr. McFadden: I do not have that information, but I shall look into the matter to see whether I can enlighten the hon. Gentleman later in the Committees deliberations.
Clause 12 remedies the situation by enabling HMRC to use the investigation powers available to it under part II of the Police and Criminal Evidence Act 1984, as it can with other HMRC responsibilities. Those powers would enable HMRC to require the production of, or to search premises for, documents of substantial evidential value to an investigation. I emphasise that those powers will be granted to HMRC only if the courts agree that documents of substantial evidential value are likely to be obtained and that such an order is necessary and proportionate in the circumstances.
The hon. Member for Huntingdon asked whether the powers will be usable only for offences triable by indictment. I am happy to confirm that that is correct. As I said earlier, clause 11 relates to clause 12, and vice versa. The investigative powers in clause 12 could not be used if the national minimum wage offences were triable only as summary offences, as the Police and Criminal Evidence Act powers are available only for indictable offences. The powers in clause 12 would enable prosecutions for the most serious offences in the 1998 Act.
Mr. Djanogly: Is the Minister therefore convinced that the measure will not encourage more indictable offences, because people will want to use the new investigatory powers?
Mr. McFadden: The measure gives HMRC the power in circumstances in which, at the moment, they are frustrated, because they have to rely on witnesses who are reluctant to come forward. Obviously, the powers will be available only for indictable offencesI have made no secret of that and have said it several times. To some extent clauses 11 and 12 go together. Clause 12 will enable prosecutions for the more serious offences under the National Minimum Wage Act 1998, such as refusing or wilfully neglecting to pay the national minimum wage, without having to rely on vulnerable and reluctant witnesses.
The clauses that we are discussing are all about looking at minimum wage enforcement and asking, Have we got the balance right? Our view is that the system needs strengthening. I stress again what I told the hon. Member for Northampton, South: I believe that most employers are decent and that they want to abide by their obligations, but I also agree with the CBI that a strong enforcement system is in the interests of both good business and vulnerable workers. When developing the proposals in the Bill, our view was that, although the minimum wage has been a great success,
Mr. Djanogly: Let me first thank the Minister for his comprehensive response to my points. We are moving from a lax systemeveryone agrees on thatthat does not work especially well, to a tougher regime. No one has a problem with moving to a tougher or better regime, but the question is whether we have retained proportionality, because of the level to which we are increasing the powers. I have voiced the Oppositions doubts on that.
It could be that because the powers of investigation in the clause are triggered only by an indictable offence, we move from a lax regime that brings no prosecutions, to an extremely harsh regime, rather than to a system that brings more prosecutions for non-indictable offences, say. The enforcement authorities would have to go for an indictable offence to get the investigatory powers, and I can understand why businesses are concerned that we are going from one end of the spectrum to the other.
That is as far as I wish to take the matter at this stage, but on the basis that we are going to think further about the measure, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Lorely Burt: I did not take part in the last discussion but I listened carefully to all the points that were made. The Liberal Democrats are minded to support the Government on the clause. It is important to give HMRC the teeth to complete prosecutions when appropriate. At the same time, we understand that HMRC might become over zealous. However, given its record, I would suggest that that is not likely. We are therefore happy to support the Government.
Mr. Binley: I can understand what the Minister has said on the clause, but to help with the policing of this measure and the minimum wage, the understanding of business is an important part of the process and allows the Inland Revenue and other bodies to do their job correctly. I would want the Inland Revenue to take that into account in its codes of practice, because the last thing we wantI am sure that the Minister would agreeis an over-zealous approach to the issue, which would do harm to the general involvement of business. We do not want business becoming protective in this respect. I simply ask the Minister to seek an understanding of that by the powers that be, who are given increased powers by the clause.
Mr. McFadden: Part of the reason for the measures is the criticism that the system is not zealous enough. We are told to be more zealous but asked not to be too zealous. Our overall judgment is that the system needs strengthening. HMRC has done a good job in recovering arrears for workersit recovers £3 million to £4 million a yearand we should not lose sight of that in a discussion on strengthening the system.
However, we would not be introducing the measures if we thought that the current system was perfect. We do want to strengthen it. I am sure that HMRC will have heard what the hon. Gentleman said about taking care in applying the proposals. I repeat what I said: in future, the vast majority of cases of non-payment will be dealt with by a civil process and the application of the new penalty procedure. I do not believe that that will involve any more than a small minority of cases.
I also think that signals from Parliament are important, and the signal that we are sending by legislating along these lines is that this is not a voluntary option but the law of the land. We are strengthening the penalty regime, and it will be possible to take the worst and most persistent offenders not just to the magistrates court but to the Crown court, where the potential fine is unlimited.
Question put and agreed to.
Clause 12 ordered to stand part of the Bill.
Cadet Force Adult Volunteers
Question proposed, That the clause stand part of the Bill.
Mr. McFadden: We take a slightly different direction in this clause, in the sense that its purpose is the avoidance of doubt. It clarifies a question about entitlement that was posed to us.
The combined cadet forcethe Sea Cadet Corps, the Army Cadet Force and the Air Training Corpsare voluntary, community-based organisations. I am sure that we are all familiar with them and the valuable and important work that they do throughout the country. They currently engage about 130,000 young people in a range of challenging and positive activities, using military themes based on the culture and ethos of the armed forces. Cadet force adult volunteers, as used in the Bill, is the generic term adopted by the Ministry of Defence to refer to any adult who volunteers to assist alongside military personnel in the delivery of the MOD-sponsored cadet force programme. There are currently 26,000 such volunteers.
Clause 13 makes it clear that those adult volunteers do not qualify for the minimum wage. It does not affect those who perform work for the cadet forces in the course of Crown employment, nor does it affect any entitlement that cadet force adult volunteers may have to the minimum wage outside their activities as a cadet force adult volunteer.
The volunteers have a long tradition of offering their time and effort for free. However, along with the high level of responsibility that they take on in their quasi-military role, there are features of being a cadet force adult volunteer that might lead to their being deemed workers, and therefore deemed as coming under the remit of the minimum wage. For example, some of them undergo special security clearance, which includes signing the Official Secrets Act; some are trained to allow safe access to Ministry of Defence facilities and equipment, including firearms, often to the same level as members of the armed forces; and some sign personal declarations or agreements to undertake certain standards of behaviour on joining that could be misinterpreted as a form of
Those features are unique to the cadet forces. They stem from their alignment with the armed forces and enable their activities to take place in a military environment and to integrate with the military chain of command. Under the next clause, we will discuss the Bill as it affects volunteering more widely, but for the purposes of this clause, we wanted to make it clear, lest there was any doubt, that cadet force adult volunteers are doing a very valuable job, but it is a voluntary job that does not bring them into entitlement to the minimum wage.
Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): Has the Minister or his Department received any representations from individuals who serve as cadet force adult volunteers saying that they should be entitled to the minimum wage?
Mr. McFadden: We consulted on that. I do not think that there were a huge number of representations, but the MOD and the Government more widely were keen to clarify the situation. The exemption will allow the volunteers to continue to operate as successfully as they do now, while removing any doubt that exists about the minimum wage. It will enable them to continue to deliver what are very valuable and often exciting programmes of challenging developmental activity to young people throughout the country.
Mr. Djanogly: We support the clause. We are aware of the grave concerns that these voluntary and very valuable cadet organisations have and their wish for the clause to be included. We recognise the huge benefit that these voluntary leaders provide and the contribution that they make to their communities and young people in this country.
Question put and agreed to.
Clause 13 ordered to stand part of the Bill.
Question proposed, That the clause stand part of the Bill.
Mr. McFadden: This clause, too, deals with voluntary workers, but in a much wider sense. It broadens the scope of expenses that can be reimbursed to voluntary workers without triggering eligibility for the minimum wage. Again, I am sure that members of the Committee will be appreciative of the hugely valuable work done by voluntary workers in all our constituencies. The clause will mean that as well as being able to reimburse expenses incurred in the performance of duties, which has been the situation until now, organisations will be able to reimburse expenses that were incurred to enable the voluntary worker to perform the duties. That will enable expenses such as those for child care and travel to and from voluntary work to be reimbursed should an organisation wish to do that.
We received many representations about the issue from voluntary organisations throughout the country. We do not seek to place barriers in the way of voluntary work. In fact, we want to encourage, foster and promote it, and the clause helps us with that. Voluntary workers are a very special class of workers, both in the legal sense and in a more general sense. They can be employed only by charities, voluntary organisations, associated fundraising bodies or statutory bodies. The exemption for voluntary workers means that they can continue to give their time for free without being eligible for the minimum wage. In turn, it also means that voluntary organisations can continue to benefit from their dedication and pay them appropriate expenses, enabling them to carry out the voluntary work.
We are determined to ensure that voluntary workers are not out of pocket as a result of their good work, but at the same time it is important to ensure that low-paid jobs beneath the minimum wage do not emerge in the voluntary sector under cover of voluntary work. However, neither can we allow spurious expenses to be claimed as benefits. The clause strikes the right balance and minimises those risks.
Mr. Swire: On a drafting point, or perhaps something more than that, proposed new subsection (1A)(a) refers clearly to expenses
incurred in order to enable the worker to perform his duties,
but proposed new subsection (1A)(c) refers to those that are not accommodation expenses. That suggests that at no stage would a voluntary worker need overnight accommodation. I do not understand why one contradicts the other.
Mr. McFadden: The hon. Gentleman is right that accommodation expenses are not covered by the clause, as is set out quite clearly.
Mr. Djanogly: Is it not the case that if the accommodation is inside the building, the rules are different? I thought that there was a difference between outside and internal accommodation.
Mr. McFadden: That is not quite the difference. The difference is that section 44 of the National Minimum Wage Act 1998 allows a voluntary organisation to provide accommodation by paying rent directly to a landlord, but it does not pay the rental costs to the voluntary worker.
Reimbursed expenses must have been incurred, or reasonably estimated to have been incurred, so reimbursement is always for an outlay. The expenses must legitimately enable voluntary workers to perform their duties, and they must not be reimbursed for expenses unrelated to their work. Furthermore, those expenses must be reasonably incurred so that the voluntary worker does not benefit from claiming excessive expenses. We will issue guidance to voluntary organisations and volunteers accompanying the changes in the Bill.
We received a significant number of representations on that issue and the clause was amended in the other place along the lines in front of us. I believe that that gives significant reassurance to voluntary organisations and workers that they can receive the appropriate expenses to enable them to carry out their valuable work without getting tied up with the minimum wage.
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