Employment Bill [Lords]

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Mr. Binley: There is a concern, particularly from small businesses, about—I was about to say policing by consent, but perhaps inspecting by consent is a better phrase. First, it takes a lot more time proportionally for a small business to deal with these matters than it takes in a larger business. Secondly, if there is a fear that inspection by one authority might lead to lots of other inspections, there is a tendency to become defensive. That defensive mechanism is not helpful to any of us.
I understand the need to ensure that those who are wilfully trying to get round provisions such as the minimum wage should be treated in the way that we would all wish to see. They should be paying the minimum wage; there is no doubt about that, but I want the Minister to assure me that it will be applied sensitively. I can see that, particularly over the next two or three years, if we made a purge—I know that that is not in the Minister’s mind—or if any officers made a purge, it could be disruptive and make it more difficult for small businesses to operate in the way that we all want them to.
However, we must also place ourselves in the shoes of the vulnerable worker, who does not know, and legitimately cannot be expected to know, what to do if they face problems at work—for example, if an agency supplied them to an employer and charged them illegally for finding them work, and they were possibly not paid the minimum wage or the holiday and other pay to which they were entitled. Surely we should try to improve the current situation, in which a person can find themselves having to phone different Government helplines to try to report the problems. As far as they are concerned, they just want to report their problem to the Government. They do not know that the agency standards inspectorate is part of BERR and that HMRC is part of the Treasury, or about friendly and proper agreement about the enforcement of the minimum wage.
Through a lot of the work on vulnerable workers, we are trying to transfer more of the burden of navigating the system from the vulnerable worker to the Government. That is certainly in the interests of the vulnerable worker, but I stress that it is also in the interests of good and legitimate business. The hon. Gentleman asked us to work with sensitivity. I absolutely believe in working with sensitivity, but there must be a tough edge to law enforcement on these areas, because we are dealing with vulnerable workers and an overall theme of the Bill is that enforcement has to get tougher.
I took issue with the hon. Member for Solihull, who is not with us today, when she raised the idea that, with the resources of the minimum wage inspectorate, the chances of inspection were once every 300 years. We do not want an inspection regime that simply sends people round the country for no reason into legitimate businesses that are obeying the law, paying and treating their workers properly and so on. We want it to be risk-based and targeted, in the interests of business and of the taxpayer. We will operate with sensitivity, but we are also determined to enforce the law. The new clause will help us to do that more effectively.
Amendment agreed to.
2.30 pm
Amendment made: No. 21, in clause 21, page 18, line 19, leave out ‘section 18 comes’ and insert
‘sections (Employment agencies and national minimum wage legislation: information-sharing) and 18 come’—[Mr. McFadden]
Clause 21, as amended, ordered to stand part of the Bill.

Clause 22

Short title
Mr. McFadden: I beg to move amendment No. 2, in clause 22, page 18, line 29, leave out subsection (2).
I do not need to detain the Committee with this amendment, which is a technical change to remove the privilege amendment made in the other place. Hon. Members will be aware that the financial powers of the other place are restricted by the rights and privileges of the House. The text in subsection (2) is inserted in all Bills with financial implications that begin their life in the other place, and it is standard procedure to remove that privilege amendment after Second Reading in this House.
Amendment agreed to.
Clause 22, as amended, ordered to stand part of the Bill.
Schedule agreed to.

New Clause 8

Employment agencies and national minimum wage legislation: information-sharing
‘(1) In the National Minimum Wage Act 1998 (c. 39), in section 15 (information obtained by officers), after subsection (5) there is inserted—
“(5A) Information to which this section applies—
(a) may be supplied by, or with the authorisation of, the Secretary of State to an officer acting for the purposes of the Employment Agencies Act 1973 for any purpose relating to that Act; and
(b) may be used by an officer acting for the purposes of that Act for any purpose relating to that Act.”
(2) In the Employment Agencies Act 1973 (c. 35), in section 9 (inspection), subsection (4) is amended as follows—
(a) after “this section” there is inserted “(or pursuant to section 15(5A) of the National Minimum Wage Act 1998)”;
(b) after paragraph (iv) there is inserted “or
(v) to an officer acting for the purposes of the National Minimum Wage Act 1998 for any purpose relating to that Act;”.’—[Mr. McFadden.]
Brought up, read the First and Second time, and added to the Bill.

New Clause 1

Amendment of the National Minimum Wage Regulations 1999
‘(1) The National Minimum Wage Regulations 1999 are amended as follows.
(2) In Regulation 31, sub-paragraph (1)(e) leave out “that is not paid through the payroll” and insert “whether paid through the payroll or by any other method”.’.—[John Hemming.]
Brought up, and read the First time.
John Hemming: I beg to move, That the clause be read a Second time.
The Chairman: With this it will be convenient to discuss New clause 7—National minimum wage: gratuities—
‘In the National Minimum Wage Act 1998 (c. 39), in section (2) (determination of hourly rate of remuneration), after subsection (5) there is inserted—
“(5A) The regulations shall make provisions with respect to employees in service industries, to provide that gratuities paid to them in the course of their employment shall not be included in the calculation of the national minimum wage to be paid to them.”.’.
John Hemming: There has been some concern about this issue. New clause 7 would have similar effect to new clause 1, which is meant to probe the issue. Depending on the Government’s response, however, we might be inclined to divide on new clause 7, if the hon. Member for Huntingdon wants to do so.
This issue is important because it is complicated to have a mix of service charges and extra bits on credit cards with some things being paid through the payroll and others not. Some subtlety is required to handle the matter. Perhaps there should be a standard service charge rather than it simply being put in the price, so that there is clarity. I am interested to hear what the Government have to say on that.
Mr. Crabb: It is a pleasure to serve under your chairmanship, Mr. Caton. Obviously, I rise to speak to the new clause tabled by my hon. Friend the Member for Huntingdon, but I support the sentiment in the new clause tabled by the Liberal Democrats.
At the start of the Committee’s proceedings on Tuesday, the Minister referred to an article that he had read in the Sunday Mirror purporting to convey some foresight into what might be a future Conservative Government’s approach to the minimum wage. On behalf of the Conservatives, I should say that we are positive about the minimum wage. When discussing an amendment earlier this afternoon, my hon. Friend said that changes can occur in political parties. One change in our party is that we recognise that the minimum wage has been a good thing, and we want it to be properly enforced and to be effective.
We are also positive about the service industry. We recognise that we have a vibrant, successful service sector that is an increasingly important component of the economy, and we want that success to continue. Our new clause would support a successful and vibrant service-based economy, from the perspective of both employees and employers. From an employer’s perspective, our new clause would make a significant difference to many people working in cafĂ(c)s, restaurants or hairdressers. Let us take, for example, the case of a student working in a city centre restaurant, doing three shifts a week, six hours each shift, totalling 18 hours a week. That person might be paid the minimum wage rate of £5.73 an hour and can expect to take home £103.14. If they anticipate that they will receive £20 in tips per night, which is not unusual in a city centre restaurant, an extra £60 will bring their wage up to £163.14. By having a properly enforced minimum wage, £163 is far better than if they were receiving a wage below that level.
Let us compare that scenario to the one uncovered by The Independent on Sunday and reported on in May this year. It was about a leading Italian restaurant chain that employed its 300 members of staff at £3.75 an hour. There was a substantial difference in what those employees were taking home. The company said in its defence that it took care to maintain that the money that its employees received at the end of each week or month was equivalent to the minimum wage level, and that it bumped it up to ensure that its staff received at least the minimum wage. That defence was weak.
I am sure that I am not the only hon. Member who has experienced particularly bad service or an unhelpful, stroppy waiter or waitress, nor would I be the first to observe that we have a problem of patchy quality in our service sector. Guaranteeing a decent minimum wage for people in the service sector will help to raise their esteem and lead to overall gain for the industry and the British economy.
Mr. Swire: I support new clause 7, and I largely support what my hon. Friend the Member for Preseli Pembrokeshire has said, but I want it to go a lot further. It hinges on the word “gratuity”—a tip. A gratuity is given to someone who has done something above what we would normally expect them to do for us. The whole issue of tipping is completely out of control in this country. I have never understood why a taxi driver who is rendering us a service when we contract him to take us from A to B expects a 10, 11 or 12 per cent. tip on top. Even when I was a little younger than I am now, taxi drivers used to emerge from the comfort and warmth of their front seats to open the door and help elderly people with suitcases. Alas, that is no longer the case, yet they still expect a tip on top of what we pay them. That is completely unacceptable.
I represent a constituency that has many people working in the service industry. The industry is casual and seasonable, and it pays a low wage. To them, the minimum wage is important. I would come down harder than my hon. Friend the Member for Preseli Pembrokeshire on the Italian restaurateur, or on any other restaurateur who acted in that way. There is evidence throughout the country of people regarding gratuities or tipping as a supplement with which to bring poor wages up to the minimum wage. Such a practice should be illegal, and it should be enshrined in law that it can never happen.
Mr. Crabb: For the sake of clarity, I too regard it as absolutely unacceptable for a chain of restaurants to use arguments about incentives as a smokescreen for paying an illegal wage to its workers.
Mr. Swire: Indeed. If I suggested that my hon. Friend did not feel as strongly about the matter as I do, I completely withdraw that remark.
Mary Creagh: I am sure that all members of the Committee feel strongly about it. Does the hon. Gentleman agree that we need to put an end to the practice whereby restaurants automatically add the service charge to a bill but leave the total blank so that people unwittingly add an extra amount? That is bad for consumers as well as for staff.
The hon. Lady rightly raised another issue about gratuities and tipping in general. As well as the appalling practice whereby service is added on and then the bill is left open, when one asks whether service is included it can seem almost like a threat to be told, “Yes, 12.5 per cent.” or whatever, as if that is not enough. Where does that money go? Increasingly often, I ask waitresses and waiters, many of whom come from eastern Europe and many of whom are struggling students, what happens to their tips. When I hear that they are all pooled and handed out at the end of the week, I do not much like the sound of that either.
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