Clause 21

Employment Bill [Lords] – in a Public Bill Committee at 2:00 pm on 16 October 2008.

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Commencement

Photo of Martin Caton Martin Caton Labour, Gower

With this it will be convenient to discuss the following: Government amendment No. 21.

Government new clause 8—Employment agencies and national minimum wage legislation: information-sharing.

New clause 3—Exchange of information between National Minimum Wage and Employment Agency Standards Inspectors—

‘(1) After section 9(4)(a)(iv) of the Employment Agencies Act 1973 (c. 35) there is inserted—

“(v) to a National Minimum Wage inspector of HM Revenue and Customs for the purposes of the exercise of their respective enforcement functions under the National Minimum Wage Act 1998 (c. 39).”.

(2) After section 15(4)(b) of the National Minimum Wage Act 1998 (c. 39) there is inserted—

“(c) may be supplied by, or with the authorisation of, the Secretary of State to an inspector of the Employment Agency Standards Inspectorate for the purposes of the exercise of their respective enforcement functions under the Employment Agencies Act 1973.”’.

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

We move on to a different subject, which is proposed in two very similar new clauses—new clause 3 and Government new clause 8. Earlier on in our deliberations, we talked—at least, I talked—about  the Government’s vulnerable worker enforcement forum, which has met over the past year and considered a number of issues in relation to the vulnerability of people at work and their capacity to report abuses, and the enforcement agency’s capacity to act on those reports. That is important in terms of the rights of vulnerable workers, in terms of legitimate businesses, and in terms of the taxpayer, who legitimately wishes to see the most effective use of their funds in the enforcement of the law.

The forum’s report, which was published in August, sets out a programme to improve basic awareness of employment rights, to facilitate and encourage the reporting of abuses and to take steps to join up the workplace enforcement bodies and enhance their profile. One key issue that the forum identified was the need for closer working between the enforcement bodies. An important element of that is the ability of the bodies to share information about non-compliance. That is addressed in the new clause in my name and in that tabled by the Liberal Democrats.

As the forum recognised, there are currently barriers to effective information sharing between some of the enforcement bodies, including between those that enforce the national minimum wage and those that enforce employment agency legislation. The Employment Agency Standards Inspectorate can contact Her Majesty’s Revenue and Customs, which enforces the minimum wage, about potential non-compliance with the minimum wage only before it has undertaken an inspection when a complainant has clearly stated that there is a minimum wage issue or where that is clear from the complaint. Once an inspection has started, the current legal position is that it would be an offence to disclose information obtained during the inspection. In those circumstances, the agency standards inspectors can only advise the complainants to contact the minimum wage helpline.

Information about compliance with the minimum wage does not always come to light until the inspection is carried out, by which time it would be too late to pass from one agency to another. Clearly, there would be value in the inspectorate being able to contact HMRC after an inspection has been carried out, rather than having two sets of inspectors working in silos, where once they had started their work, they were not able to communicate with one another. The converse is also true: the restriction on minimum wage officers being able to share information about breaches of the law with regard to employment agencies or details of non-compliant employers represents a similar barrier in the other direction.

The minimum wage enforcement team at HMRC visited 122 employment agencies last year during the course of its national minimum wage enforcement. Of those, 30 were found to be non-compliant. Those 30 agencies may be non-compliant in other ways too, so this is valuable and important information sharing. There is really only one difference between the two clauses dealing with this issue. The new clause in the name of the Liberal Democrats deals with the particular bodies I mentioned in my remarks, that is HMRC and ASI. The new clause in the name of the Government deals with the Acts, which in terms of future-proofing, should give us a little more flexibility to ensure that, were we to go down that road, even if the bodies enforcing the provisions under these Acts change in the future, the information-sharing permission which we seek to gain through this new clause could continue.

Much of this information between enforcement bodies is not a matter of principle. It is more to do with when the founding legislation for a particular body was passed by Parliament. For example, the Gangmasters Licensing Authority which was established a couple of years ago does not have this gateway problem of information-sharing. No one has suggested that the fact it does not have such a gateway is a problem. We are seeking to bring other bodies into line with that. Nor do I pretend—and it is important to stress this—that with the passage of this new clause we will have entirely dealt with the difficulty of information-sharing between different enforcement bodies in the employment field. What we would be doing is taking the earliest possible legislative opportunity after the publication of the vulnerable worker enforcement forum report to address the issue in the context of agency standards and minimum wage. Although I am grateful to the Liberal Democrats for tabling the amendment that addresses the same issue, I believe that operating on the basis of the legislation rather than particular bodies may be a better way to do it and I hope that hon. Members agree.

Amendment No. 21 provides for a commencement by order of new clause 8 and is therefore consequential to it. Amendment No. 20 deals with the passage of time. In the dim, distant and hopeful past there was a possibility that this legislation may have completed its parliamentary passage by now and, as hon. Members will be aware, the Government take the view that when bringing in new legislation which has an effect on employers or businesses, that it is best to do that on one of two common commencement dates so that employers know when changes will come into force. Hon. Members will see that clause 21 as it stands at line 16 refers to 1 October 2008 as a possible commencement date. That date has clearly passed. By my watch, that is 15 days ago and this amendment simply takes account of that to ensure a commencement date that is in the future.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley 2:15, 16 October 2008

I will not press new clause 3. It is not worth arguing about the difference between it and new clause 8 which was tabled afterwards.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

Regarding Government amendment No. 21, well spotted to the Minister or perhaps others in his team. As for Government amendment No. 20, yes, I fully appreciate that employers like to know when things are coming up.

My main concern about new clause 8 relates to safeguards. Will the Minister explain what safeguards he is proposing concerning the information that will be kept? Will he please outline how such information will be stored, how and when it will be transferred and when it will be disposed of? The concern for small businesses is that once in the system they will face arbitrary investigation as their details are passed from one agency to another, perhaps on an ongoing basis or for ever. Given the problems of lost data suffered by various Departments, will the Minister assure me and small businesses that information will be transferred only when absolutely necessary? I am interested to know how the information transfers will take place. Will it be through a centralised searchable database or by specific transfers on request? My concern is that there may be additional administrative and financial costs, when a simple phone call between investigators might be adequate.

My final concern is with the phrase “any purpose relating to that Act”, which is used extensively throughout new clause 8. It strikes me as the sort of broad umbrella term that could hide a host of things. What safeguards are there to ensure that this requirement will be complied with? Should we not have more definite parameters than “any purpose relating to the Act” within the Bill to ensure that the courts are not flooded with cases to interpret that phrase?

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

The hon. Gentleman is right to ask how the clause will work and what we have in mind. As I said in my opening remarks, when a minimum wage officer or agency standards inspector is called to inspect an organisation because of a report, if they feel that there is also a high risk of non-compliance in the other field of law, they may tell the other enforcement body about it instead of two sets of inspectors going in. Officers will be able to pass on information about a business that is found to be non-compliant. I also said such provisions operate without difficulty for the Gangmasters Licensing Authority. As hon. Members may be aware, that body operates in the field of agriculture and food production. The agency standards inspectorate works in the rest of the economy.

I would like to reassure the hon. Gentleman on the issue of data loss. We are not talking about the mass transfer of personal data, but the inspection of employment premises with a view to ensuring that they adhere to the law. We are fully aware of the concerns that he raised and we take them seriously.

New clause 8 will not affect the legal restrictions that prevent agency standards inspectors and minimum wage officers from disclosing information to other bodies. The phrase “any purpose relating to that Act” should not be too wide. It limits the use of the information to the enforcement of the two pieces of legislation that are specified. Both pieces of legislation contain criminal sanctions for disclosure that is not for the purposes of the legislation.

Photo of Brian Binley Brian Binley Conservative, Northampton South

There is a concern, particularly from small businesses, about—I was about to say policing by consent, but perhaps inspecting by consent is a better phrase. First, it takes a lot more time proportionally for a small business to deal with these matters than it takes in a larger business. Secondly, if there is a fear that inspection by one authority might lead to lots of other inspections, there is a tendency to become defensive. That defensive mechanism is not helpful to any of us.

I understand the need to ensure that those who are wilfully trying to get round provisions such as the minimum wage should be treated in the way that we would all wish to see. They should be paying the minimum wage; there is no doubt about that, but I want the Minister to assure me that it will be applied sensitively. I can see that, particularly over the next two or three years, if we made a purge—I know that that is not in the Minister’s mind—or if any officers made a purge, it could be disruptive and make it more difficult for small businesses to operate in the way that we all want them to.

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 agree with most of what the hon. Gentleman has said, but there is another side that we have to consider. He referred to some of the earlier  deliberations on the Bill and to what happens when “the inspector calls”—I think that that was the phrase he used. The amendment would mean that rather than having a series of inspectors calling about different legislation, they would be able to talk to one another in a way that they are legally prohibited from doing at the moment. I accept what the hon. Gentleman says about small businesses not wanting repeat visits, but I think that the provision could result in fewer repeat visits rather than more. I appreciate the difficulties of the small business—I represent the Department of business and, of course, we want small businesses to prosper. We fully appreciate their value.

However, we must also place ourselves in the shoes of the vulnerable worker, who does not know, and legitimately cannot be expected to know, what to do if they face problems at work—for example, if an agency supplied them to an employer and charged them illegally for finding them work, and they were possibly not paid the minimum wage or the holiday and other pay to which they were entitled. Surely we should try to improve the current situation, in which a person can find themselves having to phone different Government helplines to try to report the problems. As far as they are concerned, they just want to report their problem to the Government. They do not know that the agency standards inspectorate is part of BERR and that HMRC is part of the Treasury, or about friendly and proper agreement about the enforcement of the minimum wage.

Through a lot of the work on vulnerable workers, we are trying to transfer more of the burden of navigating the system from the vulnerable worker to the Government. That is certainly in the interests of the vulnerable worker, but I stress that it is also in the interests of good and legitimate business. The hon. Gentleman asked us to work with sensitivity. I absolutely believe in working with sensitivity, but there must be a tough edge to law enforcement on these areas, because we are dealing with vulnerable workers and an overall theme of the Bill is that enforcement has to get tougher.

I took issue with the hon. Member for Solihull, who is not with us today, when she raised the idea that, with the resources of the minimum wage inspectorate, the chances of inspection were once every 300 years. We do not want an inspection regime that simply sends people round the country for no reason into legitimate businesses that are obeying the law, paying and treating their workers properly and so on. We want it to be risk-based and targeted, in the interests of business and of the taxpayer. We will operate with sensitivity, but we are also determined to enforce the law. The new clause will help us to do that more effectively.

Amendment agreed to.

Amendment made: No. 21, in clause 21, page 18, line 19, leave out ‘section 18 comes’ and insert

‘sections (Employment agencies and national minimum wage legislation: information-sharing) and 18 come’—[Mr. McFadden]

Clause 21, as amended, ordered to stand part of the Bill.