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Lord Falconer of Thoroton: These amendments, as the noble Baroness has made clear, relate to Clause 11, which concerns the failure of an employer to allow access to records and the awards that can be made by employment tribunals in that event, as well as the period for bringing a complaint. The critical amendment is Amendment No. 83, which removes the obligation for the employment tribunal to make an award to the employer if a complaint is well founded. Instead, it says that a tribunal may make such an award. Amendment No. 84 takes the proposed discretionary power a step further, in that it gives the tribunal the option of awarding less than the full amount, which is currently set at 80 times the hourly national minimum wage rate, to be paid by the employer to the worker. Amendment No. 85 is linked with the discretionary notion, as it gives the tribunal the right to consider what is just and equitable.

As I explained during the course of debate on Clause 10, the only means of enforcing the right given in Clause 10 is by a complaint to an employment tribunal. The employment tribunal can, if the complaint is well-founded, make a declaration that an employer has not complied with his obligation under Clause 10 and then, in an attempt to obtain enforcement, make an

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award of 80 times the minimum wage. If the minimum wage is set at £3.60--I do not say that it will be, but if it were to be that--that figure will be less than £300.

It is slightly unfair and "over the top" to suggest that that is an unreasonable burden on an employer who, by this step, could effectively prevent an employee finding out--

Baroness Miller of Hendon: That is the minimum. It could be much more.

Lord Falconer of Thoroton: Not for an individual employee. It would be 80 times the national minimum wage. If the national minimum wage goes up, which I am sure is the noble Baroness's point, it will rise by that amount. It ought to be understood what the scale of the penalty will be. It is likely to remain in the same area.

Baroness Miller of Hendon: I thank the Minister for giving way again. I do not suppose that he has been in business. His expertise is in the law, and I have great respect for his knowledge. But if you are running a tiny shop and you have difficulty meeting all the salaries on a Friday, this provision could make quite a big difference. All my very modest amendment attempts to do is allow some discretion.

Lord Falconer of Thoroton: I have been in business; barristers also have to run their business. The noble Baroness may laugh, but barristers start out with no money, and they start out employing people. Barristers, like shopkeepers and everybody in small business, have the option of avoiding the penalty of £300-odd by complying with the reasonable provisions of the law.

Having the award fixed, which is what the provision amounts to, would enable cases to be handled much more swiftly and effectively in a tribunal. There will be no need for the tribunal to spend time considering specific amounts. At the same time, employers are protected, because a tribunal must first have found the complaint of a worker to be well-founded.

I believe the balance in this provision is right. It is a reasonable penalty and is the only means of enforcing the order. It is fixed, easy and simple. I respectfully ask the noble Baroness to consider withdrawing her amendment.

Baroness Miller of Hendon: I am certainly considering the lateness of the hour. Perhaps I may point out that when we originally discussed all these matters we were told that we could have two days to debate them in Committee. I understand that the House is very busy. However, as the noble and learned Lord knows, on Thursday evening we did not begin debating the Bill until late. We certainly did not spend more than five hours on it. The position is the same today. This is our second day for debate, but in effect our second half-day. The Government have offered us another evening next Monday, about which we are delighted. I shall certainly withdraw this amendment, and, undoubtedly, during the course of the evening I shall not move all of the amendments. However, I think it right to say that we on these Benches do not agree with the national minimum

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wage. We believe in a national minimum income. I have spent many hours on these amendments because I want to do justice to your Lordships and make sure that I put my points forward. One thing I can tell the Committee with certainty is this. For the hours I have put in, no matter what we hear from the Low Pay Commission regarding the level of the national minimum wage, I am not earning the national minimum wage and I suspect that many of your Lordships will not be earning it either. We shall withdraw--

Lord Carter: Would the noble Baroness speed up if we paid her the national minimum wage?

Baroness Miller of Hendon: I do not know. I thank the noble Lord the Chief Whip for his kindly intervention. All I would say is that, on Thursday, I withdrew several amendments. There are one or two that I did not move then which I shall wish to bring back on Report. I am sure that the Chief Whip does not intend to give us days and days on Report. I shall withdraw the amendment but--

Lord Monson: Before the noble Baroness withdraws her amendment, could the noble and learned Lord kindly answer my taxation questions?

Lord Falconer of Thoroton: I am sorry, in the cut and thrust of debate with the noble Baroness, I completely forgot the questions on tax and I apologise. I cannot give the noble Lord a definitive answer because neither those in the Box nor myself regard ourselves as expert tax advisers. We think that it could be set off against tax, but the noble Lord should not rely on that. It depends on the tax position of the employer, especially whether he is making profits in relation to the matter.

Baroness Miller of Hendon: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 82 to 86 not moved.]

Clause 11 agreed to.

Clauses 12 and 13 agreed to.

Clause 14 [Powers of officers]:

[Amendment No. 87 not moved.]

Clause 14 agreed to.

Clauses 15 and 16 agreed to.

Clause 17 [Non-compliance: worker entitled to additional remuneration]:

[Amendments Nos. 88 and 89 not moved.]

Clause 17 agreed to.

Clause 18 agreed to.

Clause 19 [Power of officer to issue enforcement notice]:

Baroness Miller of Hendon moved Amendment No. 90:

Page 13, line 36, at end insert--
("( ) Any requirement under subsection (2) above shall be stayed pending the determination of any appeal pursuant to subsection (4) of this section.").

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The noble Baroness said: I wish to move Amendment No. 90 and speak also to Amendment No. 91. They are simple amendments which remedy two omissions that simple justice requires your Lordships' House, as the Supreme Court of the United Kingdom, to remedy.

The amendment to Clause 19(2) provides for a stay of enforcement notice requiring payments of sums which the enforcement officer rules is due from an employer, pending any appeal by the employer. This follows normal precedent in case of civil debt, with the following distinction. If an employer is forced to pay a sum to an employee which is later ruled not to be due, then the normal facts of life make it difficult, if not impossible, to recover it from the employee, who may by then not be able to be found.

The second amendment is to subsection (7). If the tribunal decides that the enforcement officer would have had no reason to serve an enforcement notice, instead of allowing the appeal it has to rescind the enforcement notice. But by then the employer may have incurred legal and accountancy costs and all kinds of other expenses. The normal rule is that costs should follow the event. If the enforcement officer is as radically wrong as is envisaged by Section 17(6)(a), then the employer should not be left out of pocket.

The amendment gives the tribunal the widest possible discretion about the amount of compensation to be awarded, including, one assumes, taking into account the fact that the employer may have brought his problems on himself. I beg to move.

Lord Falconer of Thoroton: Perhaps I may deal first with Amendment No. 90. Subsection (2) of Clause 19 as drafted says that an officer can serve an enforcement notice requiring the employer to pay sums due to the worker because of a past failure to pay the minimum wage. I think we all agree that this is an extremely important provision.

Equally important, subsection (4) gives the employer the right to appeal against the notice within four weeks of receiving it. The amendment which we are debating would postpone an employer's duty to pay those arrears until the appeal had been heard. Thus, if the employer has been paying below the minimum wage, the worker might have to wait a further period of time before the enforcement officer could serve a penalty notice on the employer. This would plainly invite abuse from employers simply wishing to delay payment of the full amount.

We have heard that the employer must be treated fairly. And of course the Government agree with that. We have also heard that the legislation is weighted to favour the worker--and we agree with that too. I make no apologies; it is quite right that it should be so. But we must not forget that it is the employer who has the duty to pay the minimum wage. He is responsible for ensuring that he is complying with this law, as with any other law.

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If an employer is confident that he will win his appeal, because he is sure that he has always paid the national minimum wage, he can choose to pay nothing pending the outcome of the appeal. If he accepts that he was underpaying, but thinks the calculation of arrears is wrong, he should pay what he believes is due pending the outcome of the appeal. In either case he risks being served with a penalty notice imposing a financial penalty for continued non-compliance with the enforcement notice. The only purpose of a penalty notice is to penalise employers who fail to comply with enforcement notices.

However--and this is the crucial point--while it is true that such a notice can be served where the employer is appealing against the enforcement notice, in such circumstances it is not enforceable until that appeal is finally determined or withdrawn. The employer has the right, under Clause 20, to appeal against the penalty notice as well. And again, if he does so, the penalty notice is not enforceable until the appeal is finally determined or withdrawn. Only if those appeals fail or are withdrawn, will the defaulting employer have to pay the financial penalty. Indeed, if he continues to underpay the national minimum wage he may face criminal prosecution.

Members of the Committee will note that, in those circumstances, the related Amendment No. 91 would require the DTI in addition to compensate the employer. I will turn to that amendment next. The amendment would require the DTI to pay compensation to an employer in the event of the employer's appeal against an enforcement notice being upheld. The amount would be determined by the tribunal and would include, but would not be limited to, compensation in respect of any legal and accountancy costs incurred by the employer.

We have heard it argued in defence of this amendment that there needs to be some symmetry of protection for employers and employees; we have been told that, just as the vulnerable worker is entitled to claim underpayments from an employer, so the vulnerable employer should be able to claim compensation if, on appeal, an officer was found to have wrongly served an enforcement notice. But the argument on the basis of "symmetry" is misleading. It is built on false premises, and therefore draws a false conclusion--for it implies that, like a pay dispute, this is a matter of bargaining between employer and worker. But of course this Bill is not concerned with negotiations and disputes, where both sides quite rightly expect equal treatment. The relationship we are constructing is, if you like, deliberately asymmetrical. The purpose of this Bill is to protect the worker from unscrupulous employers; not the other way around.

The obligation is on the employer to pay at least the statutory minimum. He must be able to prove that he is paying it. The employer must obey the law or face the consequences, and the enforcement officer will, if he has reason to believe that the minimum wage has not been paid, serve a notice.

We expect enforcement officers will carry out their duties diligently. We will take steps to ensure that they do. So we do not anticipate that there should be many

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successful appeals by employers. But, if the employer appeals against the enforcement notice, as he is entitled to do under Clause 19, and that appeal is completely successful, the enforcement notice will be rescinded. There is no need for any additional compensation payment to the employer.

In most proceedings before a tribunal, costs are not awarded. However, were an enforcement officer to act unreasonably in conducting his defence of the enforcement notice in an appeal before a tribunal by an employer, the tribunal rules would already permit the tribunal to make an award of costs against him. To go further is unnecessary. Moreover the proposal begs an interesting question: what should be the consequences for an employer if he is unsuccessful in his appeal? Should he be penalised further? I would not argue so, but that is where the logic of this amendment would take us.

I believe that the clause works best as it is currently drafted. It reflects the approach taken to all claims to employment tribunals; namely, that costs should not normally be awarded, again to keep the lawyers out. I therefore urge the noble Baroness to withdraw the amendment.

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