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Lord Falconer of Thoroton: I agree that these provisions in the Bill should be balanced. We think that they are and are at the right level to achieve enforcement.

Let me deal with Amendment No. 106 first: to take out the word "delays" in relation to Clause 31(5)(a). We are not talking here about an employer's inability to pay,

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which will be covered by a different part of the clause. The fact is that an employer will be obliged to pay at least a minimum wage, and refusal or wilful neglect to do so will be an offence under subsection (1) of Clause 31. Rather, the provisions which are the subject of this amendment are designed for where an enforcement officer asks an employer for something to ensure compliance with the Act.

The focus of the provision is on the word "intentionally". We are not suggesting that an employer who accidentally happens to be out, for example, when the enforcement officer calls should be guilty of an offence; but employers who systematically or deliberately seek to frustrate the enforcement officer in pursuing his duties should not be allowed to get away with it. I do not think that the noble Baroness who so eloquently moved this amendment would disagree with that proposition.

That is the purpose of this provision and that is why we think that the amendment would be inappropriate. It would have the effect of removing one complete section of protection against the employer who seeks systematically and deliberately to obstruct the enforcement of the Act.--

Baroness O'Cathain: I thank the noble Lord for giving way. Surely delay is obstruction.

Lord Falconer of Thoroton: If the noble Baroness is right, what is the objection to having the word "delay" in? There would certainly be scope, I am afraid, for lawyers to regard "obstruction" as being something different from "delay", and if the person deliberately delays the officer from enforcing, there should surely be some sanction. At the moment I cannot really see the argument for not including it.

Baroness O'Cathain: I am concerned about,

    "intentionally ... obstructs an officer acting".

If somebody was delaying something for six or eight weeks, that would be covered. There could be another form of obstruction by making sure they were not allowed into the premises--that is, physically allowed in. I just feel it is tautological.

Lord Falconer of Thoroton: I entirely respect the noble Baroness's intervention but, with great respect, I do not feel that she is right because obstruction is one thing and delay is another. I shall certainly think about the drafting aspect, but I do not believe, if the point made by the noble Baroness, Lady O'Cathain, is right, that there is a point of principle between us. Indeed we are all singing from the same hymn sheet in relation to this.

Baroness O'Cathain: I was trying to be helpful.

Lord Falconer of Thoroton: I regard it as a most helpful intervention. I am sorry to have looked a gift horse so horribly in the mouth, but I do not think we are in considerable disagreement in relation to it.

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The noble Baroness moved her amendment on a slightly different basis. She had understandably been affected by the rhetoric of the noble Baroness, Lady Miller of Hendon, and saw constitutional outrages all over the shop. I do not think that is the right approach.

I now turn to Amendment No. 107. Again, it is intended to deal with enforcement officer offences, if I may so call them. Amendment No. 107 would require enforcement officers to exercise their powers in a reasonable way. The Opposition have sought to introduce the "reasonable" test at a number of points at different times during the Bill's consideration. As with the other attempts, we believe that this one, too, is inappropriate and should be resisted.

Our basic premise is that we would expect enforcement officers to act reasonably within the framework of the powers conferred upon them. That must be the basis of all enforcement. If, however, an officer fails to act in a proper manner, it is likely that he will be acting outside the terms of his power in Clause 14. I fear that a specific "reasonable" test would add nothing. It would add a further explicit hurdle, no doubt of great interest to the legal fraternity, which could make it more difficult for an enforcement officer to act speedily. At worst, it might only be of benefit to non-compliant employers trying to find ways to avoid their obligations.

I hope in the light of the assurance that I have given regarding Clause 114, the noble Baroness will feel reassured in relation to the absence of the word "reasonable" on that occasion.

The last amendment in this group is Amendment No. 108. On the face of it, that would appear to have some merit. The current drafting of the Bill would make it an offence to refuse or neglect,

    "to answer any question, furnish any information or produce any document when required to do so",

by an enforcement officer. The amendment would apply the higher standard of "wilful" neglect in a failure to comply with such requests.

I say that the amendment would at first sight appear to have some merit, because it would apparently mirror the offence of a refusal or wilful neglect to pay at least the minimum wage. However, such a comparison would be ill-founded. The reason is that we are dealing with two very different circumstances.

Throughout the Bill we have wanted to create a fair balance between the rights of employers and workers. In particular, we have set the high standard of wilful neglect for the criminal offence of failing to pay at least a minimum wage. That is because we would not want to see employers being punished through accidental failure. We recognise that in this connection accidents may happen. We recognise in particular the reality that in relation to the sometimes complicated matters of determining pay and pay reference periods, there is a possibility that accidental errors will be made, particularly during the running-in period of the minimum wage.

However, the circumstances envisaged by this provision are quite different. It seems to me that there can be little, if any, room for misunderstanding or

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accidental error where an enforcement officer has asked an employer a question or had requested him to do something, such as produce records, and the employer has not answered the question or has not produced the records. I therefore believe that wilful neglect in this context would be an unreasonably high standard to prove. On a practical level, I understand that it might be extremely difficult to prove a wilful neglect to provide information.

Clearly, we do not want to penalise accidental failure or oversight. But it is important to catch the non-accidental or "accidental on purpose" cases. If this amendment is pressed, I therefore advise the Committee to reject it. In those circumstances, I very much hope that the noble Baroness will not feel bound to press her amendment or move Amendment No. 108.

Lord Burnham: Before the noble and learned Lord sits down, is it not the fact that the inclusion of the word "wilful" in Amendment No. 108 entirely justifies the arguments made by my noble friends with regard to Amendments Nos. 106 and 107? We are talking about somebody who deliberately fails to observe the conditions laid down in the Bill. By the use of the word "wilful" the noble and learned Lord might consider accepting all three of these amendments, bearing in mind that they are a trio and are totally interrelated.

Lord Falconer of Thoroton: I have dealt with each amendment individually. So far as the word "wilful" is concerned in Amendment No. 108, the Government's view is rightly that if a person refuses or neglects to answer any question, it is hard to see that that will not be wilful. In relation, for example, to refusing to answer a question, the concept of "wilful" is very difficult to apply. That is not the case in relation to not paying a wage. There, it could be believed, bona fide, that the right wage was X, but they have got it wrong. There, it would be right to make it a criminal offence only where a person wilfully neglects to pay the minimum wage; that is, that a person knows that he should be paying X, but pays Y. We think that the payment situation is different from such a thing as refusing to answer a question. That is why there is a difference and why we think not inserting the word "wilfully" is appropriate.

Baroness Seccombe: I reject the words that I was infected by my noble friend. I was convinced by her excellent arguments. It is always a pleasure to listen to the warm and reasonable words of the Minister, but I need to read them in detail. Therefore, at this stage I beg leave to withdraw Amendment No. 106.

Amendment, by leave, withdrawn,

[Amendments Nos. 107 and 108 not moved.]

Clause 31 agreed to.

Clause 32 agreed to.

Clause 33 [Proceedings for offences]:

[Amendments Nos. 109 to 111 not moved.]

Clause 33 agreed to.

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Clause 34 [Agency workers who are not otherwise "workers"]:

Baroness Miller of Hendon moved Amendment No. 112:

Page 24, line 9, leave out from ("principal") to ("and") in line 12.

The noble Baroness said: I wish to move Amendment No. 112 and speak to Amendment No. 113. These amendments leave out paragraphs in Clause 34 which would have the effect of making an employer who engages an agency to perform functions for his business responsible for the payment of the national minimum wage to those agency workers. This is not only iniquitous but it turns the whole law of agency on its head. An employer might engage a firm of industrial cleaners to clean his premises for him. He might engage a firm of caterers to operate his works canteen. He might engage a specialist firm to operate a particular piece of equipment, for example, one of those tower cranes that we see on building sites. He may use temporary staff from one of the secretarial or employment agencies such as Manpower.

The employer, the principal if you will, is definitely not the employer of the agency worker. It is the agency who is the employer. There might be cases in the law of tort where the principal could be held liable for the wrongful acts of the agency worker, but that is not because he is the employer but because he is directing his work and actions.

The principal has no part in the contract between the agency worker and the employer. The principal does not pay him his wages, indeed, often he will not know what they are because the agency will not want the principal to know what its profit margin is. The principal is not responsible for deducting the employee's PAYE or national insurance or for holiday or sick pay. If there is a breach of health and safety regulations, it will be the agency, as his employer, who will be responsible for any damages or criminal penalties, although the principal might in some circumstances be jointly liable. For all those reasons it is wrong to involve the principal in the financial and contractual arrangements between the agency worker and his real employer.

The Notes to Clauses suggests that the reason for the provision is that,

    "It may not be apparent whether the agency worker is working for the agent or the third party".

That is nonsense. The employer is the person with whom the contract of employment is made and from whom the worker should have received his statutory written memorandum of employment terms, actually called his contract of employment. The employer is the one who actually pays the worker's wages and deals with PAYE. This may not be the person who physically hands over the weekly pay packet because it is conceivable that the agency may well ask the principal to do that for it. The simple act of handing over a pay packet on behalf of the agency, as the agent of the agent, in fact, cannot make the principal the employer. If the provision of Clause 34(2)(b) really means what it says, then I fear that some agency workers may not get their

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pay packets early on a Friday while the employer, possibly in an armoured car, makes the rounds of the various sites.

But there cannot be the slightest doubt in the worker's mind who his actual employer is, especially if he is also wearing some kind of uniform. What if the agency worker performs duties for several principals during the week or during the day--quite a common situation, especially in the industrial cleaning business? What if he does not even perform the duties for the principal on the principal's premises--in a letter shot, mailing or dispatching the principal's goods, for example?

A simple look by the employee at his PAYE records and pay slips will soon clear up any doubt in his or her mind as to who is his employer. There is no justification for involving the principal who has genuinely contracted out some activity in the pay and conditions of the agency's actual employees. There is no justification for treating genuine agency arrangements, which have long been a regular, entirely proper and indeed sometimes entirely necessary commercial arrangement, as though they were some sort of evasion device.

Agency contracts were in use long before this Bill was ever dreamed up. Whatever problems the clause seeks to resolve with regard to defining self-employed persons, disturbing normal agency arrangements will not resolve them. Nobody but nobody should be made responsible for the performance of the legal obligation of someone else under this Bill by this shotgun approach. The solution is to remove the paragraph, for which these amendments call. I beg to move.

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