Clause 8

Part of Employment Bill [Lords] – in a Public Bill Committee at 12:15 pm on 14 October 2008.

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee 12:15, 14 October 2008

No, I do not think that separate claims would be required if someone were underpaid over three or four years. As I said, in the equation on page 6, R1 is the rate at the time they were underpaid. So if someone was underpaid for 10 hours’ work three years ago and then for another 10 hours’ work two years ago, each incident would be converted into a proportion of time, and all of it would be multiplied by the current minimum wage rate. Separate claims are not needed for each year. Simplicity is important. One of the advantages of the minimum wage is that it is clear and simple to understand.

That brings me to the point made by the hon. Member for Solihull about interest. It was argued when we were consulting on fair arrears that perhaps interest should be charged on top of the calculation that I have set out. However, if we were to do that, workers would be required to complete self-assessment returns for tax due on the additional element of arrears, or interest. It is not sensible to put minimum wage workers in the position of having to fill in a tax return for what would be relatively small sums of interest when we can deal with the heart of the problem through a simple, fair arrears calculation. This is a highly legitimate issue to raise, and it has been of concern to the Low Pay Commission. Through clause 8 we will ensure fair arrears for people who are underpaid the minimum wage.

There has been a great deal of discussion this morning about various clauses. This clause will be an important measure of justice for some of the lowest paid people in the country, and I commend it to the Committee.