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Baroness Miller of Hendon: I thank the noble and learned Lord for his words. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 91 not moved.]

Clause 19 agreed to.

Clauses 21 and 22 agreed to.

Baroness Miller of Hendon moved Amendment No. 92:

After Clause 22, insert the following new clause--

Employer's failure to pay contracted wages

(" . The failure of an employer to pay any wages at all as required under a contract of employment or a contract for services shall not be treated for the purposes of this Act as a failure to pay the national minimum wage and no enforcement procedures under sections 17 to 22 of this Act shall be undertaken in such cases.").

The noble Baroness said: This proposed new clause seeks to remove an anomaly, or rather a potential cause of injustice, which seems to have been overlooked by the draftsman in framing the Bill. It is not a device to enable an employer to escape from paying the national minimum wage by the simple expedient of not paying any wages at all. He would soon get short shrift from his employees, who would justifiably march out at the end of the first pay day. Such a cumbersome dodge would be totally ineffective because the employer would also find himself in the district court in no time at all.

No, this is to cover the situation where an employer becomes bankrupt or goes into liquidation or receivership and is unable to pay the wages due to staff who then become preferential creditors. It may take some time for them to receive their wages, even supposing that there are enough realisable assets to do so, especially bearing in mind that the Crown, in the guise of the Inland Revenue and Customs and Excise, is even more preferential and may snatch all the

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available assets. It would be iniquitous if, having seized the funds available to pay the wages, the Crown were then to prosecute the employer for having failed to do so.

It is equally unfair if, following a bankruptcy, the employer's misfortunes were added to by a prosecution. It is true that there are bankruptcies and liquidations which have either a touch of fraud or of mismanagement about them. However, it is not, except in the most blatant of cases, a criminal offence to fail to pay one's debts. When that is the case, other creditors, apart from employees, will be involved. There are also severe penalties available, including imprisonment. In a normal case there is no criminal sanction because the employer has not paid his trade creditors.

There is no need to make what I may describe as unfortunate employers liable to criminal sanctions because among those ordinary creditors are included employees who, regrettably, missed their last pay day. I am certain that the Government did not intend to create a specially privileged class of creditors where, unlike electricity companies or the local council, a failure to pay results in automatic prosecution. I beg to move.

Lord Falconer of Thoroton: Amendment No. 92, which on one view is rather breathtaking in its boldness, would have the effect that complete non-payment of wages would not count as failure to pay the minimum wage. Therefore, an employer who paid his workers nothing at all would not be vulnerable to a claim by an individual under Clauses 17 or 18, or to action by the enforcement officer under Clause 19, issuing an enforcement notice, Clause 20, on behalf of a worker, or Clause 21, issuing a penalty notice. Therefore, putting aside a case of bankruptcy or liquidation, the very unscrupulous employer could simply say to his employees, "Look, we are a bit short of money at the moment. Do you mind not being paid anything at all for the next few weeks?", in which case there would be no rights even under the National Minimum Wage Bill.

This amendment appears to betray to some extent a misunderstanding of how the enforcement provisions of the Bill work. Clearly, the Government's intention is neither to leave a large loophole, so that employers can get away with paying literally nothing, nor to create duplication of claims. I can assure the Committee that the Bill avoids each of those undesirable outcomes.

Failure to pay the minimum wage is treated as an unauthorised deduction of wages. Action to pursue such a claim may be made under Section 23 of the Employment Rights Act 1996. Instead or in addition, a civil action may be brought for breach of contract. The Employment Rights Act 1996, in providing protection against unauthorised deductions of wages, also protects workers against complete non-payment of wages.

The amendment is undesirable because it would prevent claims being enforced in the event of failure to pay wages at all. This is a matter of principle. If no wages are paid at all, a worker should be able to pursue a claim under the Employment Rights Act. Where wages are paid below the level of the minimum wage, the worker should again be able to pursue the claim

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as an unauthorised deduction of wages under the Employment Rights Act. In other words, a worker should be able to recover the minimum wage especially when he is paid nothing and for whatever reason. There should not be any exceptions to this principle and the enforcement rule should apply. I ask the noble Baroness to withdraw her amendment.

Baroness Miller of Hendon: I shall read very carefully what the Minister has said. I do not recall the number of the amendment that we dealt with on Thursday which touched on a very similar point. Undoubtedly the noble Lord, Lord Clinton-Davis, will write to me on that amendment. At this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 23 [The right not to suffer detriment]:

[Amendment No. 93 not moved.]

Lord Clinton-Davis moved Amendment No. 94:

Page 17, line 2, after ("by") insert (", or by virtue of, any provision of").

The noble Lord said: I suggest that we discuss Amendments Nos. 94, 95, 98, 126, 127 and 132 at the same time. The two government amendments, Nos. 94 and 95, are linked tidying-up amendments whose purpose is to ensure consistency and correctness of drafting.

Each amendment affects Clause 23, which protects workers against detrimental action for asserting rights under the Bill. The effect of Amendment No. 94, which adds the formulation "by virtue of" in Clause 23(3)(a), is to ensure that the rights to which the protection of Clause 23 applies are rights conferred by other legislation which apply for minimum wage purposes by virtue of this Bill; for example, the legislation covering the agricultural wages regimes or regulations made under the Bill, as well as rights conferred directly by the Bill.

This brings the drafting into line with the new Section 104A(3)(a) of the Employment Rights Act 1996 inserted by Clause 25(1) of the Bill; and the equivalent Northern Ireland provision inserted by Clause 26.

I turn to Amendment No. 95, which is a drafting amendment in the light of Amendment No. 94. Clause 23(3)(b) currently specifies that the clause applies also to rights under Clause 12. This provision becomes unnecessary because Amendment No. 94 provides for coverage of rights conferred by regulations under the Bill, including regulations made under Clause 12. I hope the Committee will agree to support these minor technical amendments.

Amendment No. 132 is a tidying-up amendment consequential on the deletion of subsection (5) in what is now Clause 25, which was done by government amendment at Report stage in another place. That subsection (5) would have modified the Employment Rights Act 1996.

But the prospective modification became unnecessary as a result of Section 12 of the Employment Rights (Dispute Resolution) Act. Subsection 25(5) was

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therefore deleted by an earlier government amendment, but the corresponding deletion of the repeal entry in Schedule 3 was overlooked at the time. I apologise for that fact, but Amendment No. 132 puts it right. I hope that the Committee can agree to this minor technical correction.

I turn to government Amendments Nos. 98, 126 and 127. These highly technical amendments reflect changes in the treatment of dismissal procedure agreements made by the Employment Rights (Dispute Resolution) Act 1998, as they affect the protection of employees in Northern Ireland against unfair dismissal for asserting their rights under the Bill.

Particularly in view of the complicated nature of the amendments, I have written to the noble Baroness and the noble Lord opposite with an explanatory note. I hope that they have received it. I am happy to share this explanation with the Committee and to place it on the record.

Amendment No. 98 provides a power, in a new subsection (6) in Clause 26, for the Department of Economic Development (Northern Ireland) to make an order to repeal subsection (5), as well as the new subsection (6), of Clause 26.

Clause 26 deals with protection of employees in Northern Ireland from unfair dismissal for asserting their rights under the Bill.

Clause 26(5) inserts a new paragraph (2)(d) into Article 142 of the Employment Rights (Northern Ireland) Order 1996 (which provides for "statutory exclusions" in that the statutory right not to be unfairly dismissed does not apply to employees covered by a designated dismissal procedures agreement; but which also provides that the statutory right nevertheless applies in the case of dismissals specified in certain statutory provisions). The effect of Clause 26(5) is to ensure that the right of an employee in Northern Ireland not to be dismissed for enforcing a right under the Bill will be one of the rights that applies regardless of whether the employee is covered by a designated dismissal procedures agreement.

Section 12 of the Employment Rights (dispute Resolution) Act 1998 provides that there will no longer be statutory exclusions (of unfair dismissal rights) in dismissal procedures agreements. Instead, this will be left to the agreement to determine. Therefore, there will be no need to specify (as, in effect, Clause 26(5) does) that national minimum wage rights are outside those exclusions. Clause 26(5) thus becomes redundant.

The Employment Rights (Dispute Resolution) Act 1998 applies to England, Wales and Scotland, with corresponding provision for Northern Ireland to be made by Order in Council under the Northern Ireland Act 1974. Once that Order in Council is passed, it will become necessary to repeal Clause 26(5).

This amendment therefore provides a power, in a new subsection (6), for the Department of Economic Development (Northern Ireland) to make an order to repeal subsections (5) and (6) of Clause 26. The equivalent deletion was made to what is now Clause 25,

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"Right of employee not to be unfairly dismissed: Great Britain", at Commons Report stage--in their Amendment No. 25 (Hansard of 9th March 1998; col. 229).

Amendments Nos. 126 and 127 are consequential drafting changes arising from Amendment No. 98. They amend Clause 51(8) dealing with regulation and order-making powers for Northern Ireland.

I appreciate that these are complicated technical matters but I hope that this explanation, which will, of course, appear in Hansard, which itself is useful from the point of view of interpretation, has clarified the position and the need for these amendments which I ask the Committee to accept. I beg to move.

On Question, amendment agreed to.

10 p.m.

Lord Clinton-Davis moved Amendment No. 95:

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