APPENDIX 2: EMPLOYMENT BILL [HL]
Memorandum by the Department for Business, Enterprise
and Regulatory Reform
Introduction
1. This memorandum identifies provisions for
delegated legislation in the Employment Bill. It explains the
purpose of the delegated powers proposed; describes why the matter
is to be dealt with in delegated legislation; and details the
procedure proposed for each power and explains why it has been
chosen.
Purpose of the Bill
2. The aim of the Employment Bill is to simplify,
clarify and build a stronger enforcement regime in key aspects
of employment law. It contains 21 clauses and 1 schedule; the
main elements are summarised below in the order they are found
in the Bill.
Dispute resolution
3. The Bill implements the Government's legislative
proposals following the independent Gibbons review on dispute
resolution in the workplace and public consultation. It provides
for repeal of the current statutory dispute resolution procedures
and provisions to underpin a package of replacement measures to
encourage early/informal resolution. The package would create
significant administrative savings for business, estimated at
over £170 million per year.
National minimum wage
4. The Bill introduces a new enforcement framework
for the National Minimum Wage (NMW), involving the introduction
of a civil penalty for all non-compliant employers, a fairer method
of calculating arrears and a strengthening of the criminal investigation
and prosecution regime.
5. The Bill enables the Cadet Forces to continue
to operate as they currently do by amending the National Minimum
Wage Act 1998 to exclude Cadet Force Adult Volunteers from qualifying
for the NMW.
Employment agencies
6. The Bill introduces an improved enforcement
framework for employment agency standards, making offences under
the Employment Agencies Act each way offences and defining investigative
powers.
Trade union membership
7. The Bill ensures the rights of trade unions
to determine their membership, in compliance with the European
Court of Human Rights judgment in Aslef v UK (such that
trade unions can exclude or expel persons in circumstances where
their political party membership or activity amounts to unacceptable
conduct),
Classification of subordinate legislation
8. In deciding whether subordinate legislation
was appropriate in any particular case the Department considered
the issues of precedent, given that a number of powers are similar
to those already available in existing legislation; and the need
to ensure flexibility in responding to changing circumstances
without requiring primary legislation.
Clause-by-clause analysis of delegated powers
Dispute resolution
Clause 3(2) - subsection (6) of new section
207A
Power conferred on: Secretary of State
Power exercised by: Order (statutory
instrument)
Parliamentary procedure: Affirmative resolution
9. Clause 3 inserts new section 207A into the
Trade Union and Labour Relations (Consolidation) Act 1992 (c52),
and allows employment tribunals to vary compensatory awards where
employers or employees unreasonably fail to comply with procedural
provisions in a Code of Practice issued under Chapter 3 of the
TULR(C)A. This clause replaces section 31 of the Employment Act
2002 which made comparable provisions in respect of the statutory
dispute resolution procedures which the current bill repeals.
10. The power in subsection (6) allows the Secretary
of State to add or remove a jurisdiction to Schedule A2 to the
bill, which lists the jurisdictions covered by this clause. Together,
the listed jurisdictions cover the overwhelming majority of tribunal
claims. This replicates the current power under section 31(7)(a)
of the Employment Act 2002.
11. The affirmative procedure is considered appropriate
for these powers which amend the reach of remedies for breach
of underlying employment rights.
Clause 4
Power conferred on: n/a
Power exercised by: n/a
Parliamentary procedure: n/a
12. Clause 4 inserts a new subsection (3AA) into
Section 7 of the Employment Tribunals Act 1996 (c17). Section
7(3A) and Section 41 of the Employment Tribunals Act provide that
the Secretary of State may, by regulation subject to negative
resolution, authorise the circumstances in which employment tribunals
can determine cases without a hearing.
13. The new subsection 7(3AA) will restrict the
Secretary of State to issuing regulations authorising determination
without a hearing to circumstances where either all parties to
the proceedings consent to the process or are given the opportunity
to request a hearing.
National minimum wage
Clause 9(1) - new section 19A(6)(a) and (b)
and Clause 9(3)
Power conferred on: Secretary of State
Power exercised by: Regulations
Parliamentary procedure: Affirmative resolution
14. Clause 9(1) inserts new sections 19 to 19H
into the National Minimum Wage Act 1998 to allow officers appointed
to enforce the NMW to issue notices requiring employers who have
not complied with the 1998 Act to repay arrears to their workers
and to pay a civil penalty for non-compliance. These replace sections
19 to 22F of the 1998 Act which provide for separate notices requiring
the repayment of arrears and the payment of penalties.
15. New section 19A sets the civil penalty at
50% of the outstanding arrears, with a minimum penalty of £100
and a maximum penalty of £5,000. Subsection (6) allows the
Secretary of State firstly to make regulations to raise or lower
the percentage that is applied to the amount of arrears in order
to calculate the amount of penalty imposed upon the employer for
non-compliance and, secondly, to vary the minimum and maximum
penalty that can be imposed.
16. Clause 9(3) amends section 51 of the 1998
Act to apply the affirmative resolution procedure to regulations
under new section 19A(6).
17. We consider that powers to amend the amount
of the penalty are necessary as we cannot predict exactly the
effect of a new civil penalty on non-compliant employers. Experience
of the extent of non-compliance and the effectiveness of the new
enforcement mechanisms may render it desirable to increase or
lower penalties to ensure the effectiveness of the enforcement
regime without requiring primary legislation.
18. The affirmative resolution procedure is considered
to be appropriate for these powers which could decrease the extent
of penalties imposed on employers, as changes may be contentious
either from either employer representatives or in the interest
of protecting vulnerable workers.
December 2007
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