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Viscount Thurso: Perhaps I may respond to one point made by the noble Baroness when moving her amendment. I refer to her point about service charges and tipping. Before doing so, perhaps I may say how sorry I was not to be present in the House for the Second Reading of this Bill as I have spoken often in your Lordships' House in support of such provisions. I should very much have liked to be here to record my support then. My comments throughout this stage are intended to be helpful and constructive, even if a little probing.

It is important to understand that there are two kinds of service charge normally operating in hotels and restaurants. The first comprises tips which are left on the table by clients who have enjoyed a good meal and feel moved to leave something extra. Customarily, they are collected either by the waiter concerned or through something known as petit tronc. There is no involvement of the employer whatsoever. The sums are simply divided among the staff and very little, if any, record is kept of them. I hope that those payments are not swept up into any consideration of a minimum wage. That would clearly be quite wrong.

The other form of service charge is where a specific percentage is included on the bill by the establishment and where the patrons very often do not have any discretion about whether or not to pay it. That is called the tronc system and it is usually administered by the hotel or restaurant. The amount passes through the books and has PAYE and national insurance levied on it. When one is recruiting a member of staff, it is usual to say, "You will be paid such-and-such as a salary and you may expect to receive so-and-so from the service charge", of which usually a certain amount is considered guaranteed. In that instance, I believe that it is perfectly proper for that amount to be taken into consideration when looking at the minimum wage. However, I feel that that is encompassed within the words, "by his

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employer". As those amounts are dealt with by the proprietor of the restaurant or hotel and appear in the PAYE system and on the payroll, it seems to me that that situation would be covered by the words currently in the Bill.

Finally, I reassure the noble Baroness that the story about doormen is entirely apocryphal. I believe that that went out before the last war. In any hotel with which I have had anything to do doormen are gold dust and I do not believe that in London the minimum wage will affect any of them.

Lord Clinton-Davis: First, I welcome the noble Baroness to this debate, which of course will be very short. We shall finish at about half-past seven! I am sure that the noble Baroness will make a major contribution to that debate. I am not surprised that the Opposition took so long in Committee in another place. The noble Baroness said that it took three hours. If it relies on the argument that the Labour Party is emulating the Soviet Union, it is not surprising that it takes a long time. That is just verbiage, and the noble Baroness knows it.

I very much welcome the contribution of the noble Viscount, Lord Thurso. He has made a personal contribution to the principle of the national minimum wage. He has applied that in the hotels of which he has experience and in which he is involved. I congratulate him on applying the principle and not just talking about it.

There is a very good reason for opposing this amendment: it is against the whole thrust of what we seek to do. That is the simple answer to the points made by the noble Baroness. The amendment seeks to remove the requirement on employers to pay their workers at least the national minimum wage. It would make it very unclear where responsibility for payment rested. If there is no responsibility how can there be enforcement? The Bill makes it manifestly plain that the responsibility lies with the employer, and there is no alternative to that. The approach of the Bill, just as with other employment law, is based on the relationship between employer and worker. I do not see any difficulty in relation to that. The proposition is very simple. We are talking about a minimum wage, and wages are paid by employers. The amendment undermines the purpose of the Bill which requires employers to pay their workers at least the national minimum. How could a worker or enforcement officer press a claim if it was not abundantly clear who was responsible for paying the minimum wage? Our evidence is that business wants to see effective enforcement. Good companies do not want to be undercut by bad companies. Clause 54(4) of the Bill makes it very clear who is the employer.

The noble Baroness spoke about tips. I believe that the issue is rather more complex than she has credited. The Low Pay Commission will make a report on this matter. I am unable to set out the Government's detailed position on tips until they have responded to the whole issue in due course. What I can say is that customers in restaurants are not employers. Sometimes they treat employees as employers but they are not. They have no share in the responsibility to pay the staff the minimum wage. We shall deal with the whole area of performance

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bonuses, gratuities and tips when we come to make our Statement on the recommendations of the Low Pay Commission.

We shall consult very widely on the draft regulations which will take this issue into account. I do not want to go into the whole issue of tipping at this particular juncture. The noble Viscount, Lord Thurso, has drawn attention to some salient points. We shall return to that matter in due course. I believe that the Committee would be very unwise to support the amendment moved by the noble Baroness.

Lord Fraser of Carmyllie: Before my noble friend determines how she responds to the Minister's reply, if the noble Lord opposite believes that the Committee will be finished by 7.30 p.m. he should advise us in which week it will reach that conclusion. I regard his response on the issue of tips as totally inadequate. I recognise well enough the very real difficulty in which he finds himself; namely, the Low Pay Commission has a report on which the Government have not yet reached a view. Clearly, the Government are trying not to reach a view upon it until this Bill has concluded its passage through this House and has been returned to another place. That is unsatisfactory. It is not simply a matter that affects the narrow point of tips in restaurants. I believe that the noble Earl, Lord Thurso, is correct.

Viscount Thurso: I thank the noble and learned Lord for that promotion, but I remain simply a Viscount.

Lord Fraser of Carmyllie: The noble Viscount may in any event enjoy that promotion for only a brief period. I believe that the noble Viscount was correct in saying that there were two types of tips. First, there are tips that are simply left on a plate or are passed directly to staff and the employer has no part in their distribution. Secondly, there are those which are collected and then divided up according to an agreed formula.

As I understand the proposal in the not particularly confidential report from the Low Pay Commission, it is recommended that all payments by result, commissions, bonuses, tips and gratuities paid through the payroll--which fall into the second category--should be included when calculating salary levels. If that is the only type of tip that is included when the calculation of the minimum wage is made, the difficulties may not be very significant. However, if what is proposed--I have not seen the confidential report--is that a wider category of tips should also be included, then some very fundamental questions arise on the whole structure of the Bill. The assumption that lies behind many of the ancillary provisions of the Bill is that of necessity the employer knows what has been paid over to the employee. For example, we find in Clause 28 that in any civil proceedings that arise over this issue there is to be a reversal of the ordinary burden of proof.

It is not difficult to understand why the Government may consider that to be an acceptable approach when the employer has full knowledge of all that is paid over to the employee. But in the circumstances that we are considering in which a restaurateur may be broadly

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aware that most of his clientele tend to leave tips, he may not know how much they leave or how often they leave them or whether any tips are left in any particular week. I believe that in those circumstances there is a very real argument that the onus of proof should not be reversed. For that reason I believe it is important to know at the outset exactly what is to be included and what is to be excluded. I believe that it would be in the Government's interests to give the Committee as clear an indication as possible of what is to be included; otherwise, we shall have to go through the Bill line by line assuming the worst and that even those tips which are not passed in any way through the books of the employer are to be included when calculating whether or not the minimum wage has been met. I hope that the noble Lord will at the outset give the Committee a rather fuller response than he has given so far.

I appreciate the difficulty. From reports that have appeared this morning in the media--in particular, the Daily Telegraph--Mr. John Monks of the Trades Union Congress has been writing to the Government about what is in the report. The Committee must know what is in the report and what the Government propose to accept at the earliest possible date; otherwise, it is not simply a matter of determining whether it is £3.60, £3.40 or £3.80. If one was concerned simply with the figure that might be one thing. It is now becoming clearer and clearer that the report contains a number of other issues that must be addressed within the whole framework of the Bill. If the Government were prepared to take a number of straightforward decisions we could deal with the scrutiny of the Bill much more simply and without the elaboration which I otherwise fear will prove to be necessary.

6.30 p.m.

Lord Clinton-Davis: It is nice to see the noble and learned Lord back. I welcome him back. His contribution is bewildering because, at one moment, he says that he understands the difficulties--the Low Pay Commission report has not been published, and the Government have not responded to it--then he says that he wants to know where the Government stand in relation to the report on this and that issue. I am not going to deal with Low Pay Commission report in dribs and drabs. He understands that.

The noble and learned Lord may want to have a debate on tipping now. I can assure him that it is a long and complex subject. It is not easy to deal with. We have the tronc system; questions of who controls it and how it is controlled; and service charge issues with which to deal. This place will have ample opportunity to discuss the matter in a more comprehensible way in due course, because it will then have before it the recommendations of the Low Pay Commission and the Government's response to those detailed matters. I shall not go into the issue in any further detail this evening, notwithstanding the noble and learned Lord's implied threats. I was only joking about 7.30 p.m. It is more like 7.40 p.m. after that intervention.

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On the noble Baroness's own admission, there was considerable scrutiny of the Bill's principles in another place. We are going through a number of those debates again. This place is entitled to do that. I confess that when I was in opposition I did that on a number of occasions because it is appropriate for this place to go through such things again if it deems fit. We have reached certain agreements in that regard which necessarily mean that it is not always helpful to go through the fundamental points again.

I tried to make it clear in my first speech that in the amendment the Opposition are seeking to undermine the fundamental tenet of the Bill. I can add nothing more to what I said originally. I hope that the noble Baroness will withdraw the amendment.

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