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Lord Falconer of Thoroton: My Lords, earlier in the evening, I understood the noble Baroness to accept that records should be kept by employers. I understood her to disagree with us as to whether it was right that a particular form of records should be on the face of the Bill, but I understood her enthusiastically to accept the proposition that all employers, whether employers in a corner shop or ICI, should keep records. That explodes the whole of her case in relation to Clause 28.

As she rightly acknowledged, Clause 28 states that the burden of proof in showing, first, that someone is an employee or a worker entitled to be paid the minimum wage and, secondly, whether an employee or worker had been paid the minimum wage, is on the employer. That is an important element of the Bill and more generally of the Government's enforcement strategy in relation to the Bill. The Bill extends the right to the minimum wage to workers whose employment status might often be unclear. I have in mind particularly homeworkers and agency workers. Such workers are often in low paid categories. In other words, they are among the workers whom the Bill is designed particularly to help. Often they may be working without any explicit workers' contract. Frequently they may be working on their own or without any access to representation. If such vulnerable workers believe that they have not received

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the national minimum wage, without Clause 28 the position would be that they would have to prove, first, that they are workers for the purposes of the Bill and, secondly, that they have not received the amount of the minimum wage. The effect of Clause 28 is to place this burden on employers, not workers. In any dispute about status, employers will have to show that the individual concerned is not a worker. Similarly, in any dispute about payment, it will be for the employer to show that the minimum wage has been paid.

The noble Baroness gave the example of the small shop. She accepts that the small shop has to keep records of wages. Therefore, on the basis of her position, there is obviously no difficulty about the small shop producing the records of what wages it has paid. The employee may not be in as good a position to know what he or she has been paid. The noble Baroness asks those on her right and on her left, "Why not?", and the noble Baroness, Lady Blatch, asks the same. The reason why not is that very many people do not keep a record of what they are paid. I am sure that the noble Baroness, Lady Blatch, would keep a record of what she was paid. But I can assure her that large numbers of employees, particularly low paid employees, do not keep a proper record of it. Who would have the record? The answer is the employer; even the small shopkeeper employer. I was asked what is the nature of the arrangement between the employer and the employee and whether there would be any difficulty in the person who owns the small shop explaining to an industrial tribunal what was the nature of the arrangement on which the employee was paid. I would have thought not; whereas, if it was a homeworker or someone like that, there would be considerable difficulties.

To sum up, what the clause achieves is to shift the balance a little towards the vulnerable worker who may otherwise be deterred from taking on a powerful and well advised employer or even a small employer. Underlying it all is the simple principle that those who are entitled to the national minimum wage should not be discouraged from ensuring that they get it. In the past the burden of proof has been to the advantage of employers. It is a strength of this clause and of the Bill as a whole that the burden is being shifted to the advantage of workers in the situations that I have described.

The noble Baroness proved that it was a great and substantial loss to the Middle Temple and to the Bar as a whole that she did not finish eating her dinners, because the argument that she put with such appallingly bad material was so good and so eloquent that she would have had a huge following at the Bar. I say that with sincerity. The simple point is surely this. In the unfair dismissal example, under the 1971 Conservative legislation, what is being said is that the employer is alleged to have committed a wrong--namely, unfairly dismissed someone--but, as everyone recognised, all of the detail in relation to that would in the normal case be more likely to be in the hands of the employer rather than in the hands of the employee. As a sensible, practical matter, therefore, the Conservative Government recognised that it was right to place the burden of proof on the employer. It is exactly that

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approach which is being followed here. It is nothing to do with infringing a common law principle. It is to do with being sensible and practical and making sure that justice is done in the end.

The arrangements for the Industrial Relations Act 1971 have been repeated and used frequently and successfully over the decades. The party opposite has made no attempt to change the legislation in that respect despite 18 years in power between 1979 and 1997. The effect of the amendments proposed by the noble Baroness is to negate the reversal of the burden of proof and to shift the balance back towards the employer, to a greater or lesser extent. I do not think that I need to go through what each of the amendments does, but they have been dealt with as a matter of principle which is fair enough.

The effect of these amendments is that workers would again be left in a position where an employer could seek to evade his responsibility by claiming that they were self-employed, or they would find that the presumption of non-payment would be subject to actual evidence of non-payment. The effect of this requirement would be to devalue the presumption and negate its benefit to the worker.

For example, an employee has to establish that he has not been paid the minimum wage. The employee has not kept proper records and goes to court and states that he has not been paid the minimum wage. The employer simply says, "prove it", when everyone knows that he has records. That would be a travesty of justice. Vulnerable workers would be less likely to take cases forward and, where they did so, they would be less likely to succeed. I ask the noble Baroness to consider very carefully what I have said and to think about what is practical and what is just. We appreciate the position of the small businessman, but we believe that his position is properly accommodated. Despite the eloquence of her speech, I ask the noble Baroness to withdraw the amendment.

9.30 p.m.

Baroness Miller of Hendon: My Lords, I say to the noble and learned Lord the Solicitor-General that I do not accept that the balance is always in favour of the employer because if an employee is claiming that he has not been paid the national minimum wage, how would he know that unless he had some kind of indication as to what he ought to have been paid? It goes both ways. I am glad that the noble and learned Lord thought that I argued a very poor case very well: I thought that I argued a very good case not well enough. However, I shall read what the noble and learned Lord said with great care. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 49 and 50 not moved.]

Clause 34 [Agency workers who are not otherwise "workers"]:

Baroness Miller of Hendon moved Amendment No. 51:


Page 24, line 9, leave out from ("principal") to ("and") in line 12.

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The noble Baroness said: My Lords, in moving this amendment I speak also to Amendment No. 52. In listening to the Minister's response at Committee stage, I was quite unable to understand why the Government were objecting to a very simple pair of amendments which neither detracted from the principles of the Bill nor reduced workers' rights, but by simply clarifying the legal position it prevented an injustice being done to an innocent employer. However, I accept that the Minister is finding it difficult ever to assume that there is such an employer. Not that the Government seem to accept the concept of there being such a thing as an innocent employer: they all seem to be unscrupulous and goodness knows what they are trying to do.

At one stage the noble and learned Lord the Solicitor-General spoke about an unscrupulous employer pretending to be in financial difficulties in order to avoid paying any wages at all. At Committee stage the noble Lord, Lord Clinton-Davis, managed to conjure up a scenario of an employer deliberately marrying an employee to avoid paying her the national minimum wage. We are not discussing unscrupulous or devious employers trying to deprive the workers of their legitimate rights. We are not discussing workers of the world who have nothing to lose but their chains. We are not involved in the rhetoric of the class struggle which I thought new Labour had thrown overboard with the rest of the socialist baggage, but it may be that, deep down, it has not.

In this amendment we are trying to see that employees get what they are legitimately entitled to under the Act, but to get it from the person who is responsible for paying them and not from a third party with whom--to use a phrase that the Minister has repeated on numerous occasions--the worker does not have a worker's contract. I believe I have said this before this evening, but one thing than a politician hates is to have his words quoted against him. I remind the Minister what he said in debate at Committee stage as regards the first amendment in the Bill. The noble Lord, Lord Clinton-Davis, said,


    "The Bill makes it manifestly plain that the responsibility for"--

and we were referring to paying the national minimum wage--


    "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".

A few moments later, he said on the subject of tips:


    "customers in restaurants are not employers ... They have no share in the responsibility to pay the staff the minimum wage".--[Official Report, 11/6/98, col. 1199.]

If the customers of restaurants are not employers, neither are the clients of secretarial agencies. If customers in restaurants have no share in the responsibility to pay the staff, neither do the clients of office cleaning contractors. That is notwithstanding the mental gymnastics by which the Government have changed their stance and reversed their own arguments in the 23 pages of this Bill, between Clause 1 and Clause 34, where we are now.

The Minister argued, contrary to what he said on Clause 1, that the client should be potentially liable even if he was not actually the employer. He said that that

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was because the Government were concerned that there could be cases where there was a doubt about whether the contract was with the agency or the principal. Indeed, he suggested that,


    "Sometimes the existence of a contract is undoubtedly questionable".--[Official Report, 15/6/98; col. 1436].

I do not think that that is right. The existence of a worker's contract can never be in doubt. If A is working for B, that can be only as a result of a contract. However, I shall return to that point in a moment because I do not want to lose the train of my argument.

As I said, the Minister was worried about whether the worker would know with whom he had a contract. On the other hand, I said that there could never be any such doubt. As we both agreed that certainty for the worker was essential on this point, I asked myself how the Minister and I could both look at the same clause, but read it in such different ways. I therefore did what I promised to do when I withdrew the amendment in Committee. I carefully considered and read every single word that the Minister had said. As a result of that reconsideration, I believe that I have discovered the cause of our misunderstanding. The problem is that the Minister is a lawyer and I am not. The problem is the definition of "agency" in subsection (1). The legal concept of an agent is as defined in the Oxford Dictionary as,


    "A person who acts for another in business, politics, etc.".

Clearly, that is not the same as what we are considering.

A secondary meaning of "agency", which has crept in recent years, is "a person or a company who provides a specified service". That is the sort of agency about which we are speaking. I refer, for example, to cleaning contractors; catering contractors; those who run works canteens; secretarial agencies; and suppliers of building workers. The people they place with the clients of their agencies are the employees of those agencies, not the employees of the clients. The real test of who is the employer is simple. It is the answer to the question: who actually engaged the worker? The client will usually never have set eyes on the worker before he or she first sets foot on his, the client's, premises. Who is responsible for the PAYE and the national insurance? Does the client pay an ongoing fee to the agency for providing the services of the employee? Can the agency substitute one worker for another if the need arises?

It is simply not credible or feasible that a worker should be engaged by "Cleaners and Dusters International", hand over his P.45 from his former employers and still not know for whom he is working, irrespective of where he was directed to perform his duties. After all, the worker may be sent to several sites in one day. That will tell him that he is not working for the office or site owner, but for the agency. By the very definition contained in Clause 34(1), an "agency worker" is someone who works for an agency and not someone who works for the client.

I refer to the misconception by the draftsman of this clause when he refers in Clause 34(1)(b) to the absence of a worker's contract. As I have just pointed out, in the phrase that I quoted the Minister repeated the same

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misconception. It is not possible for anyone to be employed by anybody without a contract. If I say to someone, "Come and work for me and I will pay you £x per week" and if he or she says yes, that is a legally binding and enforceable contract. The misconception on the part of both the Government and the draftsman was shared by the late Samuel Goldwyn, who said:


    "A verbal contract isn't worth the paper it's written on".

Contrary to what the draftsman thinks and, with the greatest respect, contrary to what the Minister said, the existence of the worker's contract does not depend on the existence of a piece of paper--not even the one that the employer is supposed to supply under the Employment Rights Act 1996 in which the essential terms are to be spelled out for the employee.

The use of the words "the principal" in the clause is a misconception. The so-called agency is not engaging the worker to work for what I have called the client; it is employing someone to perform the duties that the agency itself has contracted to perform for the client to clean his office, to supply a temporary typist, to provide a hospital with a nurse, or whatever the case may be. If those duties are not performed, it is the agency that is liable to pay the client damages. The client has nothing whatever to do with the pay or the other terms of employment of the worker. His entire arrangement is with the agency, as I have demonstrated.

There is absolutely no reason why a worker should be in any doubt as to who is his employer. The Government have themselves made that clear in Clause 12 of the Bill. That clause requires an employer to provide a written statement containing "prescribed information relating to this Act". One assumes that that prescribed information includes the name of the employer. That provision completely negates the Minister's argument at an earlier stage that an employee may not know who is his employer. On the basis of the Government's drafting of Clause 12--to say nothing of the Minister's arguments that I have quoted in relation to Amendment No. 1--there is no reason whatever why the client of an agency should be saddled with the responsibility for matters over which he has no control. For that reason these amendments seek to avoid a possible injustice. In this case I do not ask the Government simply to accept the amendment; I expect them to do so. I beg to move.


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