Clause 15

Employment Bill [Lords] – in a Public Bill Committee at 5:15 pm on 14 October 2008.

Alert me about debates like this

Offences: mode of trial and penalties

Question proposed, That the clause stand part of the Bill.

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

I will try not to repeat the fairly lengthy discussion that we had about offences that are triable either way, in the magistrates or Crown court. However, clause 15 covers very similar ground, except that in this case we are talking about offences under the Employment Agencies Act 1973.

As hon. Members will be aware, employment agencies and agency work have been rising higher up the political agenda in recent years. The Committee will be pleased to hear that I do not want to take us down the highways and byways of European directives. However, at the same time as we are strengthening enforcement of the minimum wage, we also want to strengthen enforcement of the regulations surrounding agency work.

At present, under section 5(2) of the 1973 Act any breach of the regulations governing employment agencies is a criminal offence, triable as a summary offence in a magistrates court. The experience of the Employment  Agency Standards Inspectorate, which is the part of the Department for Business, Enterprise and Regulatory Reform that polices this area of labour market providers, has been that, although the present approach has proved effective for the great majority of agencies that are reputable and wish to comply with the regulations, it has not been as effective as it might be for the very few agencies that seek to avoid their legal responsibilities and refuse to comply with the legislation. This issue was taken up by Conservative Front Benchers, who asked me several times why there were not more prosecutions under the agency standards rules. That lack of prosecutions has been part of the problem in this area.

There are difficulties related to the limitations of prosecution for summary offences in terms of adequacy of penalties and limitations of prosecution powers. The most significant problem occurs when an individual who has been prohibited from running an agency, because of their unsuitability on account of misconduct, ignores a ban on running an agency. The maximum penalty for breach of a prohibition order is a fine of £5,000, as we discussed before when we talked about other offences that are triable in a magistrates court. Such a fine may not be an effective deterrent where the agency is highly profitable.

We are talking about quite specific circumstances here, where someone can be prohibited from running an agency but they ignore that prohibition because the activity is so profitable and the maximum fine is £5,000. In addition, the penalties may not be adequate for cases where agencies illegally charge, or seek to charge, for work-finding services, or where they fail to pay agency workers for the work that they have done.

At the moment, under the current system there is no scope for the Employment Agency Standards Inspectorate to prosecute for “attempting” to commit offences under the legislation. Again, this means that the inspectorate needs to identify witnesses who are prepared to give evidence against the agency.

I am not someone who says that all agency work is at the dark end of the economy; I do not believe that. I believe that many agencies give very valuable flexibility and, often, highly paid work to the agency workers whom they employ or find work for. Nevertheless, in some instances we are dealing with dark corners of the labour market, and we know that in those circumstances, relying on witnesses to come forward and give evidence can be difficult. Therefore, we are again seeking here to strengthen the enforcement regime. That can be difficult because some people feel—particularly when they may need to have repeated contact with an agency to get work time after time on short placements—that if they give evidence, the work from that agency may dry up. Of course, we also often deal with migrant workers who are travelling to and from their home countries.

By making the most serious offences under the 1973 Act triable on indictment or summarily in magistrates courts, the maximum penalty will be increased to an unlimited fine when the case is tried on indictment under clause 15. The clause is important in ensuring that there are appropriate parities for the most serious cases of offences under the 1973 Act, for the reasons that I have set out.

Some circumstances are quite specific to agency work, such as issues to do with the vulnerability of workers and the powers of the standards inspectorate to prohibit  people from running agencies. The question of whether such prohibitions can be properly enforced when contravening them can be highly profitable gives rise to some issues. In those circumstances, we have to ask ourselves whether a £5,000 fine is high enough. The judgment that the Government have made is that it is not. In those circumstances, we seek the power to try such offences in a higher court.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General 5:30, 14 October 2008

On the question of the clause and the 1973 Act, we feel that the extension of criminal chargeability is valid and justifiable in these circumstances. We have seen instances where the existing powers are not adequate, just as we said that we saw that the powers were not adequate when discussing clause 11. To that extent, we have not tabled any amendments and will support the clause.

Question put and agreed to.

Clause 15 ordered to stand part of the Bill.