Clause 69

Pensions Bill – in a Public Bill Committee at 10:00 am on 7th February 2008.

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”Employee”, “worker” and related expressions

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

I beg to move amendment No. 185, in clause 69, page 33, line 20, leave out ‘whether oral or’.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

With this it will be convenient to discuss amendment No. 186, in clause 69, page 33, line 29, leave out ‘whether it is oral or’.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

Clause 69 is a veritable dictionary of definitions of different terms, which is very helpful. Words need to have precise meanings that we all understand when we are passing legislation, so it is certainly a helpful clause from that point of view. This is purely a probing amendment; note the word “probe” rather than “prove”, which may have been there originally, that comment is just to help the Minister in case he is working from an old brief. It is just to tease out exactly what an oral contract of employment might be, particularly one that is implied. In my naivety, I had thought that all contracts of employment would be in writing, express and quite clear, but that is clearly not the case; I have obviously led a more sheltered life than I had realised. It seems to conjure up all sorts of possibilities, so can the Minister paint in some of the detail on what types of contract of employment we are talking about being expressed or implied, particularly oral?

Photo of Danny Alexander Danny Alexander Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey

The amendment raises an important point. I appreciate the hon. Gentleman making the point that this is a probing amendment and it will be interesting to hear the Minister’s response. The reference to oral contracts in the Bill is important to retain. Particularly among the target group, who are working for low incomes perhaps in several different jobs who we have rightly worked on at various stages of the Bill, there are circumstances where some will be left out of the scheme because their are earnings are below the qualifying limit, which is a point that I made earlier in the Bill. They may not have what hon. Members on the Committee would regard as a written contract, which we would have with our staff—well, many Members would—or whatever, none the less, an oral contract would be regarded as a contract of employment. Certainly in Scots law there is strong protection for oral contracts and I know that that is what the Bill seeks to do. There are precedents for written contracts being required; the Employment Rights Act 1996 requires that the case of money being deducted from a salary must be in written contract. I can see the hon. Gentleman’s point in relation to central costs, but none the less it is important from the point of view of giving the maximum possibility for people in the target group to benefit from personal accounts that the provision that the amendment seeks in a probing nature to delete is retained in the Bill.

Photo of James Plaskitt James Plaskitt Parliamentary Under-Secretary, Department for Work and Pensions

I was interested to hear the hon. Member for South-West Bedfordshire declare how possibly sheltered his life had been. It is a fact of the matter, as the hon. Member for Inverness, Nairn, Badenoch and Strathspey pointed out, that there are a great many oral contracts in existence, certainly non-written formal employment contracts. As Members of Parliament we do not have formal written contracts, which is a point that we will  come to later in the Bill and I am sure that we are all looking forward to that. As the hon. Member for South-West Bedfordshire says, clause 69 provides an array of definitions. I will take the opportunity now to respond to his specific points about oral contracts, while fully appreciating that the amendment is of a probing nature. A contract exists when it is written down or when an individual is told by someone offering work to start work on a given date for a set rate of pay, which in itself constitutes an oral contract. In an ideal world, of course, a contract would be written so that both parties were fully aware of the terms and conditions of employment, and the majority are.

However, we know that there are people without written contracts and we do not want to exclude them from the reforms. I know the hon. Gentleman does not want to do that either. The fact that someone may not have a piece of paper does not mean that he or she is not entitled to employment rights, and those extend beyond pension issues into other employment issues. The amendments would simply enable employers to avoid the duties established in the Bill by using an oral contract in place of a written contract. Obviously, that would not be right, because these reforms are about extending workplace pension saving with a minimum employer contribution to as many individuals as possible. The hon. Member for Inverness, Nairn, Badenoch and Strathspey is right to say that there are likely to be many in the target group with oral contracts.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

It genuinely is a probing amendment, and that clarification is useful. I was interested in the hon. Gentleman’s definition of an oral contract as one where somebody was told to do some work at a particular point. Could the employer get out of having a contract by saying, “I would like my house cleaned, but I will leave the time up to you, as long as it gets done,” without giving a particular start date? Would that avoid an oral contract, by the Minister’s definition?

Photo of James Plaskitt James Plaskitt Parliamentary Under-Secretary, Department for Work and Pensions

I am no expert on oral contracts, but I suspect not. As I understand it, once an engagement has taken place between employer and employee, a function has started, and payments are being made in respect of that activity, an oral contract has commenced. If that is incorrect, I will let the hon. Gentleman know, but that is my understanding at this point.

Photo of Danny Alexander Danny Alexander Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey

For clarification, there are many people in my constituency who work in the tourism industry. In some cases, what happens is that one applies for a job, interviews for the job, agrees to start the job on Monday, working four days a week at x rate of pay, and does so. Custom and practice means that what one has is therefore a contract of employment. Although it is not written down, that is a legally binding arrangement, to which all employment laws should apply.

Photo of James Plaskitt James Plaskitt Parliamentary Under-Secretary, Department for Work and Pensions

I think we have reached broad agreement on what constitutes an oral contract, and I hope with that reassurance the hon. Gentleman will agree to withdraw the amendment.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

Without further ado, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 69 ordered to stand part of the Bill.

Clause 70 ordered to stand part of the Bill.