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Lord Sainsbury of Turville moved Amendments Nos. 28 and 29:

"( ) Statutory paternity pay shall not be payable to a person in respect of a statutory pay week if it is not his purpose at the beginning of the week—
(a) to care for the child by reference to whom he satisfies the condition in sub-paragraph (i) of section 171ZA(2)(a) or 171ZB(2)(a) above, or
(b) to support the person by reference to whom he satisfies the condition in sub-paragraph (ii) of that provision." .
Page 8, leave out lines 34 to 36 and insert—

"(4) A person shall not be liable to pay statutory paternity pay to another in respect of a statutory pay week during any part of which the other works under a contract of service with him.
(4A) It is immaterial for the purposes of subsection (4) above whether the work referred to in that subsection is work under a contract of service which existed immediately before the statutory pay week or a contract of service which did not so exist.
(4B) Except in such cases as may be prescribed, statutory paternity pay shall not be payable to a person in respect of a statutory pay week during any part of which he works for any employer who is not liable to pay him statutory paternity pay."

On Question, amendments agreed to.

Baroness Miller of Hendon moved Amendment No. 30:

    Page 8, line 34, leave out "Except in such cases as may be prescribed,"

The noble Baroness said: I would not like to think that the atmosphere in here is such that I dozed during those few moments! All I was interested in—and it was quite short and quite easy—was what is meant by "such cases as may be prescribed as the exception". I beg to move.

Lord Sainsbury of Turville: I covered this point: the drafting is entirely consistent with the maternity provisions. It relates to the circumstances in which a woman has two part-time jobs and qualifies for pay from both of them and in some circumstances is able to return to work for an employee while receiving maternity pay from the other. We are replicating that situation here. If it would help the noble Baroness, I shall write to her and cover in detail the rather complicated situation to which this applies.

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

Amendment, by leave, withdrawn.

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4.30 p.m.

Lord Sainsbury of Turville moved Amendments Nos. 31 and 32:

    Page 8, line 39, after "a" insert "statutory pay"

    Page 9, line 3, after "section" insert—

""statutory pay week", in relation to a person entitled to statutory paternity pay, means a week chosen by him as a week in respect of which statutory paternity pay shall be payable;"

The noble Lord said: I beg to move.

On Question, amendments agreed to.

Baroness Miller of Hendon moved Amendment No. 33:

    Page 11, line 11, leave out "normal" and insert "average"

The noble Baroness said: Amendment No. 33 is a very short amendment which requires an equally short and, I trust, simple explanation. While speaking to it, I would like also to speak to the identical amendments, Amendments Nos. 34 and 37, at line 18 on page 11, and also to Amendment No. 260, on page 55 line 41. I would also like to speak to Amendments Nos. 38 and 39.

The Bill talks about a person's "normal weekly earnings" and the first batch of my amendments seeks to alter the meaningless word of "normal" to "average". What are "normal" earnings? If a person is on a variable wage scale—say, hourly or piece rate, or in a job where overtime is sometimes payable—then who is to say what his "normal" wages are? Using the meaningless phrase "normal" will provide work for the court and for whole teams of lawyers. The clause, as drafted, attempts to define "normal", but how does it do so? It does it by reference to the "average" earnings, which is the intention in my amendment in any case.

I suspect that the draftsmen were simply trying to use the same word twice in the same sentence, but I am sure that we do not want to create a whole new legal concept of "normal" wages, simply because of some imaginary rule of syntax.

In Amendment No. 38, I propose to leave out the words:

    "subject to subsection (8) below"

and in Amendment No. 39, I propose that we should delete the whole of subsection (8). This is because, if my first amendment were accepted—and I hope it will be, because this is a very sensible amendment—the whole of subsection (8) would be redundant. I beg to move.

Lord Sainsbury of Turville: I shall talk to Amendments Nos. 33 to 39. A number of these amendments to the pay and adoption clauses replace the word "normal" with "average" in relation to the way in which earnings are calculated, to work out how much statutory pay someone is entitled to.

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Baroness Miller of Hendon: The noble Lord referred to Amendments Nos. 33 to 35, but the group includes Amendments Nos. 33 and 34, and then 37 to 39.

Lord Sainsbury of Turville: I shall speak to all of them.

Baroness Miller of Hendon: The Minister will speak to the amendment before I have actually—

Lord Sainsbury of Turville: I am sorry—I have got the headings wrong. I shall speak simply to the ones in the group.

A number of these amendments to the pay and adoption clauses replace the word "normal" with "average" in relation to the way in which earnings are calculated for working out how much statutory pay someone is entitled to.

I am tempted to ask "what's in a name?" because the effect of these amendments is to replace one undefined word with another. The language of the relevant clauses follows the language of the statutory maternity pay legislation in Section 171(4) of the Social Security Contributions and Benefits Act 1992. The very important question is how "normal earnings", or whatever we call them, are defined. That is what this part of Clause 2 does: it provides for "normal earnings" to be defined in regulations.

This brings me to the noble Baroness's second set of amendments to these clauses—those which have the effect of removing the ability to define "normal weekly earnings" in regulations. I note that the noble Baroness has not tabled an amendment to place a definition of "normal weekly earnings" on the face of the Bill. The cumulative effect of these amendments would be to leave both employers and employees with no clear understanding of what "normal" or "average" weekly earnings might be.

A definition of "normal weekly earnings" will inevitably be highly detailed and it will have to be included in the regulations. It cannot simply be reduced to the layman's word "average" without departing significantly from the maternity precedent. We believe that that detail is best set out in regulations, following the maternity precedent.

We must have a formula which is fair to the employee in properly reflecting what he receives from his employment and fair to the employer because it is straightforward to calculate. We intend here that "normal weekly earnings" for both paternity and adoption purposes should follow the model of the existing provisions for statutory maternity pay. The calculation of a person's normal weekly earnings for statutory maternity pay purposes is set out in Regulation 21 of the Statutory Maternity Pay (General) Regulations 1986. We intend to mirror that calculation for both statutory adoption pay and statutory paternity pay.

I hope that the noble Baroness, Lady Miller, is happy with this approach. Some of her amendments would change simply names and not substance, and

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others would prevent us placing the detail in regulations—a significant departure from the statutory maternity pay precedent.

I now turn to the final amendment in the group which we are discussing in respect of Clause 22. We have considered "what's in a name", and I should say that there is no great significance in the use of the terms "average weekly earnings" for maternity allowance and "normal weekly earnings" for statutory maternity pay. As I shall explain, the calculations are different in a number of respects, reflecting the different nature of the payments in question. However, the key to both is that the calculations involve averaging amounts of pay in order to arrive at a fair amount on which to base entitlement.

Having said that, the draftsmen may well have felt that "average" was a more appropriate term to use in the context of maternity allowance because earnings from more than one job can be used to work out a woman's entitlement to maternity allowance, and the woman may well not have "normal" earnings as such in the same way as she might have "normal" weekly earnings from just one employer.

Let us take the example of a woman who has three jobs. Her earnings vary in each job depending on how many hours she puts in, but generally she earns £20 a week in job one, £40 a week in job two, and £5 an hour for the few hours she occasionally puts in for job three. As her wages vary, what is "normal" for her? The important concept for maternity allowance is to be able to add all her earnings together and average them out to arrive at her weekly rate of maternity allowance.

Noble Lords may find it helpful if I explain how maternity allowance works. In 2000, we improved maternity allowance by extending entitlement to pregnant women on low earnings who did not earn enough to pay national insurance contributions. We did that by basing entitlement on the level of a woman's average weekly earnings from all sources rather than on the payment of national insurance contributions.

To obtain maternity allowance, a woman must satisfy two tests. First, she must have been employed or self-employed in at least 26 weeks out of the 66-week period ending with the week before the week when she expects her baby to be born. That is known as the test period. Secondly, she must earn on average at least £30 a week. Under the current scheme, that average is then compared with the lower earnings limit for national insurance in force at the beginning of her test period. If the average is at least equal to that lower earnings limit, she will receive standard rate maternity allowance. If the average is less than that but at least £30 a week, she will receive a weekly rate of maternity allowance worth 90 per cent of her average weekly earnings. From 2003, she will simply receive £100 a week, or 90 per cent of her average weekly earnings if that is less.

Average weekly earnings for maternity allowance are worked out over a 13-week period. The woman may choose the 13-week period in which she received her best earnings; for example, she can take account of

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any period where she may have been paid a bonus or other payment which boosts her earnings in order to maximise the maternity allowance paid to her. I should say that this is in line with the statutory maternity payment calculation where account is taken of any payments made, including bonuses, when working out the average weekly earnings for statutory maternity pay. From 2003, we intend that a woman will have even more flexibility in the maternity allowance scheme to maximise her average weekly earnings, reach the qualifying maternity allowance threshold of £30, and thus get the best rate of maternity allowance that she can. From 2003, she will be able to average out her earnings from the best 13 weeks in her test period.

Maternity allowance is intended to help pregnant women who work close to or during their pregnancy but who cannot qualify for statutory maternity pay because they are low paid, have more than one job, have broken work records or have recently left employment. By enabling those women to choose the best 13 weeks' earnings from different sources and average out their earnings, we are helping more women to obtain the financial help that they need in order to stop work for a period around the time of their babies' birth. Therefore, we believe that "average earnings" and not "normal earnings" is the correct expression. We believe that it more exactly describes a process by which relevant earnings are set for maternity allowance.

For completeness, I should explain that the rules for maternity allowance are rather different from those for SMP, which take the average of earnings over an eight-week period ending with a fixed point in the fifteenth week before the expected birth. The reason for the different approach is that for SMP we need to have a method of establishing earnings close to the start of maternity leave which achieves a balance between fairness to the employee and simplicity of operation for the employer. However, with regard to maternity allowance, we are dealing with women who may not be in employment at the end of their pregnancy, who may have a broken record of employment or for whom it is fairer to look at earnings over a longer period.

I appreciate that the different use of the terms "normal earnings" and "average earnings" may seem puzzling. However, the way in which the terms are used in the Bill simply carries forward a difference in terminology in the existing legislation on maternity allowance and statutory maternity pay. What matters is what happens in practice. Now that I have explained the maternity allowance rules, I hope that your Lordships will understand why they work in the way that they do and agree that they are entirely reasonable. Therefore, I invite the noble Baroness to withdraw the amendment.

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