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Lord Falconer of Thoroton: The amendment was beguilingly moved by the noble Baroness. She made the amendments sound so attractive. However, we have had time to think about them and we do not, for the reasons I shall indicate, believe that they would be an improvement to the Bill. They would be a detriment to it.

Perhaps I may deal first with Amendment No. 12. That amendment, as was accurately stated by the noble Baroness, requires the Secretary of State to be reasonable in determining the pay reference period. I do not imagine for one moment that the Secretary of State would wish to be unreasonable in determining that period. Indeed, the noble Baroness accepted that that was the position. The Secretary of State will make her decision in the light of the recommendations of the Low Pay Commission: an entirely reasonable approach.

The Government are currently considering the detailed application of the commission's recommendations, including this one in relation to the pay reference period. We are keen to ensure that the nitty-gritty of the legislation gets this right. The Bill provides, of course, for the Secretary of State to prescribe what the reference period should be, by means of regulations subject to affirmative resolution. Those regulations will, of course, be debated by Parliament.

Prior to that, the Government will consult on the draft regulations particularly with a view to ensuring that we get the details right. The consultation will give those affected a further opportunity to comment on the length of the reference period. So there is the advice of the Low Pay Commission; the consideration of the Secretary of State; the consultation on the detail by the Secretary of State; and the placing before Parliament of the regulations. That gives rise to a huge range of views to be taken into account.

It is difficult to envisage a process that could be more reasonable than that. There is no need to inject a reasonable requirement explicitly into the Bill itself, as

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the amendment proposes. To do so would be counter-productive. If the amendment were accepted, speaking as a lawyer myself, I am sure that the lawyers will have a field day. I can imagine all kinds of lengthy disputes and debates on whether any particular decision was reasonable.

The effect of the amendment would be that, even if the Secretary of State chose a period which she considered reasonable, others would have the right to challenge it and substitute their view for hers. I do not think that would be right. I do not believe this is a matter for lawyers to debate. It is a matter for government to decide after proper consultation and after taking proper advice in relation to it.

It is always difficult to argue against the inclusion of the word "reasonable" in legislation--because it seems unreasonable so to argue. But surprisingly, often the word achieves nothing, as in this case, and causes difficulties--again, as in this case.

It would be unusual, and unduly and unnecessarily prescriptive, to include an explicit test of "reasonableness" in this legislation. We expect our elected representatives to act in a reasonable way. If someone considers that a decision of the Secretary of State has been made on wholly unreasonable grounds, there is already scope to challenge it.

I hope that I have assured the Committee that the way in which we are proceeding is entirely reasonable. We have the Low Pay Commission's recommendations; we are consulting further; and we shall come back to this House with the detailed regulations. I am equally confident that the outcome will also be a reasonable one. I hope that deals in detail with the attractively put but, I respectfully submit, flawed proposal that the noble Baroness made in this amendment.

I now turn to Amendment No. 13. This in effect proposes to put limitations on what the Secretary of State may prescribe as a pay reference period. I can reassure the Committee that before we bring regulations on this matter before the House--namely, setting out what the pay reference period shall be--we shall be consulting on the draft regulations, particularly with a view to ensuring that we get the details right.

The consultation will give those affected a further opportunity to comment on the length of the reference period. There is no need to prescribe the reference period on the face of the Bill. There is no need to place limitations on what the pay reference period should be. Clause 1(4), as presently drafted, provides a power to set and adjust the pay reference period. It will be a matter of judgment as to what the pay reference period should be; and there can be different pay reference periods for different kinds of workers. Surely the right course in relation to this is to give maximum flexibility in order to avoid the kinds of anomalies to which the noble Baroness referred. I do not think the proposal she makes is of value to the Bill; I think it is positively detrimental and could give rise to the kinds of anomalies that she mentioned. With the greatest of respect to her, I suggest that she withdraws both of these amendments.

Baroness Miller of Hendon: In the other place my honourable friend complimented the Minister on having

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responded sensitively; here in this Committee, the noble Lord the Minister said that I asked the question attractively; but we do not seem to have got very far. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 13 not moved.]

Clause 1 agreed to.

Clause 2 [Determination of hourly rate of remuneration]:

[Amendments Nos. 14, 15 and 16 not moved.]

Baroness Miller of Hendon moved Amendment No. 17:

Page 2, line 8, at end insert (", including remuneration by the piece rather than the hourly rate").

The noble Baroness said: Piecework is not another name for sweated labour. It is an incentive method whereby more able and faster workers can earn more by their own efforts. It is a system where those working from home can do as little or as much as they wish and can work at whatever pace suits them. The days are long gone since the notorious speed-up of the production line inaugurated by the late Henry Ford.

It is true that there are some unacceptable cases of vulnerable home workers and some factory workers still being ruthlessly exploited by unscrupulous employers. We join in the condemnation of such conduct.

The fact is that piecework is an essential part of some industries, including, for example, farming, horticulture and packing goods for mail order. Unless the Government intend to outlaw and prohibit this method of remuneration--which they do not--piecework and piecework rates are factors which have to be taken into account when calculating the minimum wage to which an employee is entitled.

There are, however, complicating factors affecting the amount that an employee may receive. Some employees may work more slowly than the average on which the piece rate is calculated. Machinery may break down during the course of a working day, with no contingency to make up for the resulting lost pay. The problem is, once again, that trying to reduce pay calculated on some other basis into an hourly rate causes a major complication.

Our amendment to Clause 2(2)(c) does not alter or detract from the provisions of that clause. It supplements it by emphasising one of the factors to be taken into account. Maybe the clause as drafted already requires the Secretary of State to take piecework remuneration into account. Certainly paragraph 2(c) of the DTI's Notes on Clause 2, Part 31-1 Detailed Provisions, claims that the regulatory powers include:

    "wages ... paid on a "non-time" basis eg piece work".

The amendment underlines that point that is in the notes. It is belt and braces, if you wish.

The Secretary of State will be required to frame the regulations so as to produce a viable formula to correlate the piece-rate remuneration to the hourly rate, a formula that will not allow employers to use creative accounting or for pieceworkers to fall through the cracks in the system.

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The amendment is intended to concentrate the Secretary of State's mind on the problem. I suggest that there can be no harm in this modest amendment, which simply emphasises what the Government claim the clause already does. The amendment simply removes any ambiguity. I beg to move.

Lord Falconer of Thoroton: I think we are completely at one in relation to this matter. As far as we are concerned, it is vital that the Bill covers pieceworkers. We know from having read the debates in the other place that it is in relation to piecework that some of the most appalling exploitation goes on. There are horrible examples, such as people being paid 8p for sewing a pair of trousers. There is no doubt that piecework should be covered. I genuinely pay tribute to the noble Baroness for raising this point.

The Bill was specifically drafted to cover that point. Subsection (2)(c)--the one that the noble Baroness wishes to amend--says:

    "That the regulations may make provision for determining the hourly rate in cases where ... the remuneration is, in whole or in part, otherwise than at a periodic rate or rates".

That is specifically drafted to deal with the piece-rate position. I sympathise entirely with the desire of the noble Baroness that it should be underlined. However, we do not believe that it is necessary; we honestly believe that that is the Bill's intention. We applaud the sentiment, but take issue with the drafting. In the light of those comments, I hope that the noble Baroness will be minded to withdraw her amendment.

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