Employment Bill [Lords]

We are discussing employment at extremely short notice. I do not wish to labour the point; others have said that the Government are frightened of Catholics in by-elections. [Interruption.] Did I hear a sharp intake of breath from the Minister? A by-election's timing over which the Government had total control is a poor reason for delaying for three months the passage of other legislation and for introducing this Bill at very short notice—and nor does that aid scrutiny. This is the 29th piece of employment legislation that this Government have brought before the House. Nevertheless, it is largely welcome in that it repeals some previous legislation that was highly burdensome and bureaucratic for business. We shall be supporting the Bill's Second Reading, but there are a number of issues on which we would like significant progress to be made in Committee. Some areas will need careful scrutiny, but our principal areas of concern about the Bill are to do with sins of omission. Let me begin by acknowledging the changes that we support. The Gibbons review of the Employment Act 2002 and its 2004 consequential regulations clearly stated that the aims of that legislation had simply not been achieved. The original purpose of the legislation—to encourage conciliation as an alternative to a tribunal—had not been successful. As the Government's response to the Gibbons review says, the procedures imposed a high administrative burden, and far from encouraging amicable settlements appeared to have encouraged involvement of lawyers at an early stage. However, that failure masks a more important negative philosophical shift. The 2002 Act divided opinion between those who believe that procedure matters in and of itself because it validates an individual's worth, and those who believe that procedure is merely a means to an end. A liberal would say that procedure matters, because treating people fairly matters in and of itself independent of whether the outcome would have been the same. It is very much to be commended that the Government have reviewed the 2002 legislation and are now repealing it, even if their change of mind has been brought about only by unintended side effects rather than a true conversion of principle. I welcome the reversion to the Polkey principle, which recognised that fairness does matter—dismissal under such principles may be found to be unfair on procedural grounds. However, the principle also recognises the merits or otherwise of the case, and allows a tribunal to reduce the compensatory part of the award in proportion to the likelihood that dismissal would have gone ahead anyway if correct procedure had been followed. The acceptance by the CBI and others of a reversion to Polkey principles has, however, been dependent on a promise of simplification of the ACAS code of practice. Employers want a code of practice that they can actually follow. The new draft code, which was published during the consideration of the Bill in the other place, will need to be carefully scrutinised in Committee to ensure that it is a genuine simplification and that it is clear. I suspect that a considerable proportion of our time in Committee will be spent in examining that draft code. Several Members have spoken about the ASLEF judgment. We acknowledge the changes made following the debate in the other place to specify more clearly the grounds on which a union may prohibit someone from membership on the basis of their affiliation to a political party. While recognising that the abolition of closed shops should give unions greater freedom to decide their own membership, we nevertheless thought that the original wording in the Bill was drawn far too broadly. The new definition adopted in the other place meets many of our original concerns. However, we will also want to re-examine that and explore it further in Committee. The hon. Member for Huntingdon (Mr. Djanogly) raised one particular issue relating to previous as well as current membership of a political party. Thirdly, we welcome the effort to toughen action against those who fail to pay the minimum wage. The new powers proposed for inspecting officers seem sensible, and the possibility of trying serious cases in the Crown court is also welcome, as it increases the fine possible in serious cases. I, like the hon. Member for Hayes and Harlington (John McDonnell), am disappointed that the Government have not taken the opportunity of this legislation to end the national minimum wage's discrimination against young people through the lower rate. People under the age of 21 do not get a discount in shops for being young, and it is hard to justify why young people should be paid less for doing the same job. I am also disappointed that the Government have not used this legislation to deal with the issue of people using tips as an excuse for not paying the national minimum wage. As a consumer, I want to know that any tips I pay are extra money that will go to people who are probably working extremely long hours for the minimum wage. The Minister reassured us that the Government are examining the issue, but I hope that they will do so in time to table amendments in Committee. The Government have the whole summer in which to consider the matter, because according to the programme motion the Committee will not sit until October. I hope that they will work with people in all parties who clearly feel strongly about the issue to introduce a practical means of solving that problem. The new formulae for calculating the arrears of employers who fail to meet minimum wage legislation are a welcome step forward. Using the current rather than historical rate of the minimum wage is not only a fairer way of calculating arrears for employees, but gives employers an incentive to settle arrears today rather than to delay until next year. I heard what the Minister said in reply to my intervention about interest rates and tax, but I hope that we may still explore the matter in more detail in Committee to see whether there is a means of getting round the problem. It is unfair that employers are able to have an interest-free loan at the expense of an employee. New formulae are all well and good, but the chance of a business being inspected for a breach of national minimum wage legislation remains extremely low. Moreover, even if an employer is inspected and found to be in breach of the law, the chance of their being prosecuted is almost non-existent. Just three of a total of 14,500 or 15,000 cases of arrears have ever been prosecuted—the Minister gave the exact figure in his speech. Why is that figure so low? I would like to think that an amicable result was found in all cases, but that seems highly unlikely. The problem of a failure to pay the minimum wage appears to be increasing. The Minister mentioned that the average arrears for each individual is now more than £200, which compares with the previous financial year's considerably lower figure of £130. Enforcement is vital not only for individuals who are inadequately rewarded for their work but, as the Minister mentioned, for employers.