Previous Section Back to Table of Contents Lords Hansard Home Page


Lord Goodhart: My Lords, is that a reference to an account balance on dealings between the member and the LLP or is it an account balance in the sense of the proprietary interest of the member in the LLP itself? If the latter is the case, what provision would ensure payment of it?

Lord McIntosh of Haringey: My Lords, I was just about to come on to that point. Property that is in the name of the LLP will remain the property of the LLP, although an outgoing member may have an equitable claim against the remaining members, depending on what contribution he has made to the LLP. My first answer is about the more limited case of the account balance with the LLP; my second answer is the wider definition.

Perhaps I may move on to the points raised by the noble Lord, Lord Phillips. He asked about the availability of the books and records of a limited

16 Mar 2001 : Column 1139

liability partnership. I can confirm that Regulation 7(7) provides the default position that a member of an LLP may have access to the books and records of the LLP. But I can go further than that. Section 222(1) of the Companies Act 1985, which is applied to LLPs, permits the members of an LLP to have access to the accounting records of a company. That is a statutory, not a default, provision.

The noble Lord asked about regulation 7(9) on employees. Regulation 7(9) requires a member of an LLP to account to the LLP for profits made in carrying on any business "of the same nature" as the LLP if he does so without the consent of his fellow members. That would cover the situation where a member of an LLP sets up a competing business or consultancy. It is also arguable that it would cover the situation where a member's wife or husband sets up a company and the member works for it. However, if this issue proves to be a problem in practice, it could be looked at again in the future.

Regulation 7(9) is only a default provision. It derives from the Limited Liability Partnerships Act, which is the subject of the second review.

Lord Phillips of Sudbury: My Lords, I am grateful to the noble Lord for giving way. His answer has not covered my point on the difference between someone with a proprietorial interest in a competing business and someone who is purely an employee of it. Regulation 7 does not cover that.

Lord McIntosh of Haringey: My Lords, I am not sure what the noble Lord, Lord Phillips, wishes to achieve. Is he afraid that employees are not covered, or does he wish to have them not covered?

Lord Phillips of Sudbury: My Lords, I shall say what I would have preferred and what I think would have been more comprehensive. If a member of the limited liability partnership was competing with his partners, whether as a proprietor or as an employee of a competing business, that would be a default provision. The spirit of this point is that someone will not compete against his own partnership. This would be a way of doing that which would not be caught by regulation 7.

Lord McIntosh of Haringey: My Lords, that is why I made the point about a husband or wife setting up another business and the wife or husband working for it, presumably as an employee. Of course, this is part of partnership law, which is the subject of separate review. If any review of partnership law were required, it would be made in due course to apply also to limited liability partnerships. In any case, it is only a default provision, so an LLP can make sure that it covers the point of an employee if it were thought to be necessary.

The noble Lord's final point concerned regulation 10. He asked whether "shall apply as from time to time in force" includes "as and when amended". The answer is yes.

16 Mar 2001 : Column 1140

Perhaps I may briefly return to the point made by the noble Lord, Lord Goodhart, about the account balance. The answer to the first definition is that it is the balance between the member and the LLP and not the proprietary interest. I hope that I made that point clear.

Lord Goodhart: My Lords, before the noble Lord sits down, the suggestion that there should be some kind of unspecified equitable right on an outgoing member to recover the value of his property from the LLP is a very unsatisfactory way of dealing with this problem. It is not at all clear what the basis of that equity would be. I wonder whether, even at this late date, the Government would be prepared to consider introducing further regulations to clarify that point.

Lord McIntosh of Haringey: My Lords, legislation inevitably relies on elements of the common law. I have already said that there is pursuit in tort for certain failings, if I may use a non-legal word. To introduce the common law of equity here would not be unreasonable. If it does not work, we may have to do something else about it. But that is why these are regulations and not primary legislation.

On Question, Motion agreed to.

National Minimum Wage Regulations 1999 (Amendment) Regulations 2001

1.27 p.m.

The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville) rose to move, That the draft regulations laid before the House on 26th February be approved [9th Report from the Joint Committee].

The noble Lord said: My Lords, I am grateful to the business managers for allowing two sets of regulations to be considered together. As it appears that the regulations are not matters of burning interest to Members of the House, that is very helpful.

The proposed regulations make necessary changes to the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 and the National Minimum Wage Regulations 1999 (Amendment) Regulations 2000. The first will make it easier for employers and workers involved in a dispute over the application of the part-time regulations to reach agreement without resorting to an employment tribunal. The second make a minor point of clarification on who is entitled to the national minimum wage.

If your Lordships are content, the regulations on part-time workers will apply to England, Scotland and Wales, with Northern Ireland introducing its own legislation along similar lines. The national minimum wage regulations apply to the whole of the UK. Both amendments will come into force on 1st May this year and be effective from that date.

16 Mar 2001 : Column 1141

Both sets of regulations will improve the operation of the original legislation. They will help to encourage a partnership approach from employers and workers in applying the part-time workers regulations and correct a potential anomaly in the national minimum wage regulations regarding the trainees' exemption.

I shall explain the need for the two sets of regulations. On the part-time workers amendment, the original regulations successfully implemented a European directive designed to end discrimination against part-time workers in their contractual terms and conditions. We implemented them using the Employment Relations Act 1999. The regulations have been broadly welcomed and are already having a positive impact. The amendment we are considering today will give parties involved in a dispute greater capacity to come together to settle their differences without having to go to a tribunal.

Provisions of this type are standard in employment law and apply to virtually all other employment rights, including the right to claim for unfair dismissal and the right to bring a claim for discrimination on the grounds of sex, race or disability. The regulations will increase the chances of settling a dispute in two ways.

First, they will amend Section 18(1) of the Employment Tribunals Act 1996 to increase the ability of ACAS to conciliate in claims brought under regulation 5(1) of the part-time workers regulations. Regulation 5(1) gives part-timers the right to equal treatment in their terms and conditions of employment when compared with similar full-timers. The amendment allows officers appointed by ACAS to conciliate between parties to reach a binding agreement before a claim reaches an employment tribunal. Any conciliation would be entered into on a voluntary basis and the proceedings are generally informal. There is no time limit attached to the conciliation process and no set format. Negotiations can be conducted over the phone or in face-to-face meetings with one or both of the parties. There is no need for either side to take formal legal advice and either party retains the right at all times to revert to a tribunal hearing.

The second element of the part-time amendment amends Section 203 of the Employment Rights Act 1996 to allow workers to contract out of their right to bring claims under the original regulations where an effective compromise agreement has been reached. For an agreement to be effective, the worker must have received advice from an independent adviser. This could be a qualified lawyer, a certified trades union official or an advice centre.

I shall turn now to the national minimum wage amendment. As noble Lords will recall, in July of last year, Parliament approved a number of regulatory changes to the minimum wage, including an increase to the main rate and an exemption for national trainees as recommended in the second report from the independent Low Pay Commission. However, during the debate, a minor technical difficulty with the part of those amending regulations dealing with national trainees came to our attention.

16 Mar 2001 : Column 1142

On 14th July 2000, I explained to the House the problem and announced our commitment to return with a slightly amended version of the relevant regulations as soon as possible to clarify the situation once and for all. This was accepted by noble Lords and this amendment to the principal regulations fulfils that commitment.

The detailed point at issue with the national minimum wage amendment is a particularly complex one which results from a potential mismatch between the wider definition of "worker", including "agency worker" used in the National Minimum Wage Act and a reference to a certain type of trainee known as a "national trainee" in the National Minimum Wage Regulations 1999 (Amendment) Regulations 2000, which took effect on 1st October 2000.

The way in which the regulation is drafted means that there could be a situation where a young trainee not employed with a company might count as an agency worker because he had been supplied by a training provider. The provisions in the regulations exempting trainees would not apply, so this particular trainee would be entitled to the national minimum wage, unlike his fellow trainees employed directly by the company. However, I should stress that such a reading of the law would rest on a rather obscure legal technicality and be counter to a common-sense understanding of what the law intends. Since this point did not impinge on the main intention of the new regulations, noble Lords approved them in July of last year.

In summary, the two sets of regulations before the House will contribute to the ability of employers and workers in Great Britain to operate more effectively when dealing with matters of employment law. The part-time amendment gives employers and workers greater scope to settle disputes in a spirit of partnership. The national minimum wage amendment puts right a particularly tricky piece of legal drafting. I hope that my explanation of the need for and the effect of these changes has been helpful to noble Lords. I commend the two regulations to the House.

Moved, That the draft regulations laid before the House on 26th February be approved [9th Report from the Joint Committee].--(Lord Sainsbury of Turville.)

1.34 p.m.

Lord Burnham: My Lords, I welcome the Minister to the House to present this "mish-mash" of regulations. I hope that the House will excuse me if I suddenly begin to refer to the Channel Tunnel and limited liability at an inappropriate moment. I notice that the Benches behind me are absolutely crowded!

I thank the noble Lord for his explanation of these two orders. We understand why Her Majesty's Government wish to exempt people on government training schemes. That is perfectly acceptable. However, there are one or two matters on the subject of part-time workers which, while being acceptable, need to be looked at.

I believe that this is a demonstration of the gold-plating of regulations to ensure that employers provide to part-time workers who believe that their pay and

16 Mar 2001 : Column 1143

conditions do not match pro rata those offered to comparable full-time staff written statements outlining their reasons. The British Chamber of Commerce has warned that because,


    "such statements would be admissible as evidence in any consequent litigation, employers would be forced to seek legal advice, even if they have grounds for justification".

Here again we are putting yet another burden on employers, in particular small employers. The requirement to provide statements will prove costly and time-consuming and is not a requirement of the European directive. It is a blunt instrument that could fall as heavily on firms that offer their part-time staff equal pay and conditions as on those more unscrupulous employers who do not.

Once again, the Government are guilty of gold-plating EU directives and imposing unnecessary burdens that small firms will find it difficult to shoulder. We do not believe that there is widespread unfavourable treatment of part-time workers. Job satisfaction among such workers is higher than among full-time workers. The 1998 Workplace Employee Relations Survey found that,


    "part-time employees were much more likely to regard themselves as being fairly treated than were full-time employees--61 per cent compared with 45 per cent".

I appreciate that these may be only minor niggles to be set against the enormous amount of extra legislation and orders which are being imposed. However, having said that, we are happy with the regulations as they stand.

1.37 p.m.

The Earl of Erroll: My Lords, I should like to make three brief comments from these Benches, which I notice are the most crowded. First, I wish to flag up a growing concern that the minimum wage might be extended to apply to people working, for example, as house sitters. They are not working as such, but are doing what they would do at home--watching television and walking the dog. In some cases, such people are glad to have a free roof over their head. They have minimal outgoings. They can bank virtually all the money they receive because their expenses will be limited to buying shampoo and such like. At the end of a week, they may well be able to save a great deal more money than a commuter in a proper job who has to meet the costs of the outgoings in a normal dwelling place.

I read somewhere that it has been proposed that house sitters should be paid the minimum wage for 24 hours a day because they are on site for that time. The wage of £4.10, paid for 24 hours a day over seven days would come to £98.40 a day, which would total a weekly wage of just under £700. That is absolutely ridiculous. Many people are grateful to secure such employment because they are not particularly qualified to do anything else and it is a pleasant existence. I have never employed a house sitter; nor do I intend to do so. I have no direct interest in the matter. However, I know some people who work as house sitters.

16 Mar 2001 : Column 1144

There are similar occupations in which these circumstances apply. I refer to when a person is not undertaking a hard job of toil, but rather is sitting down and watching television. He or she is required simply to be present in the building. To apply the minimum wage to such people prices their services out of the market. It will remove a source of pocket money for a certain group.

In the name of common sense, we must retain exceptions for certain types of personal employment. If we do not do so, we shall simply increase the black economy. I appreciate that this point may not relate strictly to the regulations before us, but I wished to give voice to a matter that is of concern and affects many ordinary people. I do not expect a specific reply.

Secondly, we have encountered problems with the minimum wage. Our personal experience is that suddenly we have had to look at the effectiveness of our workers. Before, you could allow someone to potter around cleaning, not very effectively, or potter around the garden because they enjoyed doing it, and so on. Now, the minimum wage is inflating everything and we are having to look at restaffing because it is too expensive. We now need people who are effective, who know what they are doing, who have a proven track record and so on. I am afraid that that is the reality and that it will happen more and more. So, again, the regulations are removing some people who would love to have an occupation from a place where they could have an occupation.

Thirdly, in regard to part-time rights and all the business of going to tribunals and so on, we have already been done for this. We had someone who was disruptive working in the house. Matters eventually blew up into a major row. She had been switched from one task to another because she did not like carrying out the first, and in trying to accommodate her we ran over the one-year limit. She threatened to take us to the industrial tribunal, and the legal advice that we were given was that it would be cheaper to settle by paying her £3,000.

What will that do to the people who stay behind? They will look at the situation and realise that if they create trouble they will get a quick hand-out of three thousand quid when they leave. It is a quick way of stinging a small employer who cannot afford this kind of thing.

It is entirely unfair and ridiculous, and it is disruptive to the workers who stay behind. All it does is hand a licence to print money to people when they go. I know people who know that their current employees are deliberately doing this at the moment in order to wind them up to ensure that they get a hand-out when they leave. I know this has happened in other places. I wanted to make that comment about these gold-plated regulations, of which I disapprove.

16 Mar 2001 : Column 1145


Next Section Back to Table of Contents Lords Hansard Home Page