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House of Lords

Thursday, 23rd January 2003.

The House met at eleven of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.

Prayers—Read by the Lord Bishop of Southwark.

National Minimum Wage (Enforcement Notices) Bill [HL]

Report received.

Clause 1 [Enforcement notices]:

Baroness Miller of Hendon moved Amendment No. 1:

    Page 1, line 14, at end insert—

"(2B) No notice under subsection (2) or (2A) shall be served in respect of any pay reference period more than six years before that date of the service of the notice.""

The noble Baroness said: My Lords, I must confess that I am not surprised to find myself having to take up the time of the House by bringing back this extraordinarily simple, wholly constructive, non-political and uncontroversial amendment. As your Lordships know, the Government have adopted a totally Pavlovian, rejectionist attitude to any amendment that I may propose. In the almost six years since that disastrous day when I moved from that side of the Dispatch Box to this, there has never, to the best of my recollection, been an occasion when the Government readily conceded that I had a valid point. That is not to say that I have not won amendments; nor is it to say that they have not finally conceded—at the tenth minute of the ninth hour, if you know what I mean. But the truth is that it has never been easy. The concession was never given quickly or smilingly. I am not saying that it is down to the noble Lord, Lord Sainsbury. I am very hopeful that the noble Lord, Lord McIntosh, filling in for the noble Lord, Lord Sainsbury, will show a different attitude from today onwards.

When all else has failed and no logical argument could possibly be mustered, Ministers have always fallen back on the line that, "This amendment is not necessary". The National Minimum Wage (Enforcement Notices) Bill, an amending Bill, is necessary because of the way in which the original legislation has been interpreted in practice. As noble Lords will know, a tribunal decided that an employee who left his employment could not retrospectively gain his lost minimum wage. The Bill, and the National Minimum Wage Act 1998 itself, commit the,

    "Officer acting for the purposes of the Act",

to make a retrospective order in relation to any underpayment of the national minimum wage for an unlimited period of time. That is not a fanciful interpretation of the legislation. It is the plain wording of the 1998 Act, which does not place any limitation on how far back the order can go.

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Noble Lords who have sat through these debates will recall that, on Second Reading, I said that I would table an amendment to this effect because the retrospection allowed in relation to notices seemed unlimited. However, the noble Lord, Lord Sainsbury, said, "No, the notice can go back only three years, so you needn't worry", but I knew that he was wrong. Subsequently, after our debate on Second Reading, he wrote to me and said:

    "There is no limit in the legislation on how far back enforcement notices may be taken".

That could not be clearer. However, when we discussed this amendment in Committee and I thought that the Government would immediately accept it, what was the Minister's argument? As usual, he began by saying:

    "in practice, we believe that the amendment is not needed".

He went on to claim that the fact that employers are required to hold records for only three years would mean that,

    "the Revenue would find it difficult to pursue cases that went back further than three years".—[Official Report, 9/1/03; cols. 1103-04.]

It may be difficult, but it is not impossible.

The Minister himself readily accepted my argument that there are means of proving underpayment other than the employer's records; for example, with payslips kept by the employee himself. He admitted to the Committee that two routes were open to the employee and the enforcement officer in respect of any alleged underpayment. The first is the ordinary civil courts, where any claim would be subject to the provisions of the Limitation Act 1980. The Minister told the Committee that he agreed that that legislation would apply. That limitation restricts claims for any simple civil debt to a period of just six years.

However, as the Minister admitted in his letter to me, and as he admitted to the Committee, under the tribunal procedure, claims could go back much longer. He said that,

    "it seems likely that few cases . . . will go back further than six years".

A few cases? One case would be too many.

There is an unacceptable anomaly. It would be so easy just to accept it and allow the two procedures to operate side by side. Parliament should not, however, be creating a two-tier system of justice whereby people can get more in one court than in another.

I am sure that the Minister's obstinate refusal to accept my amendment, the principle of which he told your Lordships he agreed with, is due to a total misunderstanding of what it actually says. I say that with all due respect to the noble Lord, Lord Sainsbury, especially because he is not here. In Committee, he said:

    "I . . . think it would be wrong to create a position in which officers using the tribunals route could not go back as far as the workers themselves could".—[Official Report, 9/1/03; cols. 1103-04.]

The amendment provides for absolute parity between the two routes. That is why I say that he must have misunderstood the amendment—which provides six years' retrospection regardless of the forum, court or tribunal, that the employee chooses.

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There is currently a discrepancy whereby an applicant to a tribunal can in theory present a grievance dating back 10 or 20 years. In a court, however, the applicant would be bound by the statute of limitations which allows only six years. The situation is a nonsense. I am sure that, this time, the noble Lord, Lord McIntosh, will agree. I beg to move.

Lord Razzall: My Lords, the noble Baroness, Lady Miller of Hendon, clearly feels aggrieved that as regards minimum wage and employment legislation it is very difficult for her to persuade the Government to accept her amendment. She seems to believe that some prejudice is held by the Government against her and that if someone else produced the amendment perhaps it would be accepted by them. I cannot speak for the Minister who, as we know, can speak most ably for himself.

On this occasion, as on so many others, we will not be supporting the noble Baroness, not because we have any prejudice against her—indeed, how could one possibly have that?—but simply because on this, as on many other matters, we disagree with her.

First, I am not sure that it is a sound thesis on which she bases the amendment. Why should an individual holding a number of payslips, and who has become aware for the first time that he or she has been underpaid, be artificially restricted in the remedies available to him or her? Why should they be so restricted?

Secondly, as a former lawyer I am always extremely dubious of legislation attempting arbitrarily to interfere with limitation periods. I do not wish to anticipate what the Minister has to say, but I believe that the Bill should remain as drafted on this point and that it should not artificially attempt to interfere with the limitation period.

Lord Blackwell: My Lords, can the Minister say how the time period relates to claiming back payment for benefits? Obviously, a number of recipients of the national minimum wage may well be recipients of benefits or be entitled to benefits. I wonder what is the Government's obligation as regards people claiming past benefits and how that would appear in relation to parity with their ability to claim on employers.

11.15 a.m.

Lord McIntosh of Haringey: My Lords, I remind the House of what the noble Lord, Lord Sainsbury of Turville, said in Committee about the practical effects of this amendment. He explained that there are two ways of pursuing a failure to comply with an enforcement notice. He said that the first is to pursue it through the county courts, but in such cases the Limitation Act 1980 already applies. It is only possible to recover arrears for a period of up to six years from the date of each underpayment.

Almost all cases brought by the Revenue have used that route and they are already subject to a six-year restriction. It is possible to proceed through the

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employment tribunals. It does not happen very often because the claim has to be made within three months, which is a difficult limitation. It means in practical terms that that route has hardly ever been used by the Revenue. The vast majority of cases can only refer back six years before the date on which proceedings are brought. Although in theory some cases could be taken further back, in practice that is extremely unlikely. I remind the House that the noble Lord, Lord Sainsbury, pointed out that employers are required only to keep wage records for three years. Therefore, if records are to be kept for a greater period, which is relevant to the question raised by the noble Lord, Lord Blackwell, the employer would have to keep records going back further.

The noble Baroness, Lady Miller, is right. There is a difference between very rarely and never. We have thought about the matter again. We believe that it would be right in practice to provide for something similar to what the noble Baroness wants. It cannot be the amendment before us because it has technical problems, but it will be one which says roughly what the noble Baroness wants. We hope to have it drafted in time for Third Reading.

I am sorry that that proposal disappoints the noble Lord, Lord Razzall. You cannot win them all. The very purity, if I may put it that way, of the argument put forward by the noble Baroness, Lady Miller, that even if it hardly ever happens—and it could not for a number of years because the national minimum wage relates only as far back as April 1999—ultimately tips the balance.

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