Clause 49

Part of Pensions Bill – in a Public Bill Committee at 10:00 am on 31st January 2008.

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Photo of Danny Alexander Danny Alexander Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey 10:00 am, 31st January 2008

I agree with much of what the hon. Gentleman said. Government amendment No. 156 makes a lot of sense in that it seeks to close a loophole that would have allowed employers to claim back any inducements that may have been offered to employees to get them to opt out of a pension scheme. It is absolutely right that an employee should not have to repay any such fee as it is the employer who would have broken the law and should therefore take the consequences.

I wish also to speak in support of new clause 1, which adds something useful to the Bill by creating this offence. It would add something to the range of powers in the Bill, and knowing that this additional matter was there would add to the sense that any employer considering such a step would have about its gravity. I do not know whether it is the hon. Gentleman’s intention to press this new clause to a vote. No doubt he will consider that having heard the Minister’s response, which I will certainly be interested to hear.

There is a further issue which Government amendment No. 156 attempts to address, and that is the issue of inducements being offered prior to someone accepting a contract of employment. That is quite a difficult area, which I tried to capture in amendment No. 98, which was quite naturally not selected for debate, but where I think there is a genuine question. This clause, for example, relates to something being written into an employee’s contract which obliges them to opt out of the personal account, on the basis of which they accept some additional financial emolument. Clearly, it is quite possible that such a transaction would be proposed by an employer before the person had accepted the job.

The prospective employee turns up for interview, has the interview, and then the employer says, “I have offered you the job, but I would like you to sign this contract”. The potential employee sees the contract and says, “Hold on. This is not right. I am not going to sign away my right to a personal account. It is an offence under the Act”. No doubt there will have been a very full publicity campaign so that potential employees will be aware of their rights. The employer then says, “Sorry, I have changed my mind, I am not going to offer you this job. I will look for somebody else”. Clearly, the employer would be in breach of the Act. Government amendment No. 156, if anything, tightens up that restriction. I am concerned about the position of someone who is not yet an employee. They may have been denied the option to take a job for which they are eminently qualified on the basis of an unwillingness to move forward in the illegal way that the employer has proposed.

I note that both the TUC and the Engineering Employers Federation are also concerned about this issue, albeit a blanket pre-employment right might be too broad, not least because it would potentially allow people to go to an employment tribunal and claim that this was the reason, even though it was not. None the less, it would be useful if, in the context of amendment No. 156 and new clause 1, the Minister would reassure the Committee on this point, and perhaps look further at whether the provisions he is trying to make with amendment No. 156 could be further strengthened to take account of the concern I have raised.