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National Minimum Wage (Enforcement Notices) Bill [HL]


 

These notes refer to the National Minimum Wage (Enforcement Notices) Bill [HL]
as introduced in the House of Lords on 21st November 2002 [HL Bill 8]

NATIONAL MINIMUM WAGE (ENFORCEMENT NOTICES) BILL [HL]

     


     EXPLANATORY NOTES

INTRODUCTION

1. These explanatory notes relate to the National Minimum Wage (Enforcement Notices) Bill [HL] as introduced in the House of Lords on 21st November 2002. They have been prepared by the Department of Trade and Industry in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.

2. The notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment, none is given.

SUMMARY AND BACKGROUND

3. Section 1 of the National Minimum Wage Act 1998 (c.39) has the effect that all qualifying workers are entitled to be paid at least the rate of the national minimum wage, as set by the Secretary of State from time to time.

4. The Secretary of State has appointed the Inland Revenue to act as the enforcement body for the purposes of the Act, as provided for in section 13 of the Act.

5. Sections 17 to 22 of the Act relate to enforcement. The effect of section 17 is that where a worker has been paid less than the minimum wage, he is entitled under his contract of employment to be paid the difference between the amount he was in fact paid and the amount he would have been paid had he received the minimum wage. Section 19(1) contains provisions enabling an enforcement officer to serve an enforcement notice requiring an employer to pay a worker or workers the minimum wage for a current pay period and in future. By subsection (2), the notice may also require the employer to pay arrears due to the worker or workers because the minimum wage was not paid in the past.

6. Schedule 2 to the National Minimum Wage Act 1998 amended the existing legislation on agricultural wages to secure that the minimum hourly rates for agricultural wages cannot be less than the national minimum wage. That Schedule also provides for the enforcement regime for the national minimum wage, which includes sections 17 and 19, to be the enforcement regime for the agricultural national minimum wage. The Secretary of State has appointed DEFRA, the Scotland Office and the Northern Ireland Office to enforce the agricultural minimum wage in England and Wales, Scotland and Northern Ireland respectively, as provided for in section 13 of the 1998 Act.

7. On 16th August 2002 (in the case of Inland Revenue v Bebb Travel plc) the Employment Appeal Tribunal held, interpreting sections 19(1) and (2), that an enforcement officer acting for the purposes of the Act could only issue an enforcement notice requiring an employer to pay the minimum wage to a worker in respect of—

a)     the worker's current and future pay periods, or

b)     the worker's current and future pay periods and past pay periods.

8. It follows from this ruling that an enforcement officer has no power to issue a notice in respect of past periods only and, therefore, no power to issue a notice at all in relation to workers whose employment with the employer has already ended.

9. Until this decision, enforcement officers had been issuing enforcement notices that related to past periods only, particularly in cases where workers were no longer working for the employer in question.

10. Section 20 of the Act provides that, where an enforcement notice is not complied with, an enforcement officer may take proceedings on behalf of the worker to recover the underpayments of the minimum wage covered by the notice, whether by complaining to an employment tribunal under the Employment Rights Act 1996 or suing for breach of contract. The section expressly provides that these enforcement powers do not affect the ability of workers to recover underpayments of the minimum wage by taking such proceedings on their own account. However it is the view of the Government that some workers will not be capable or will not be prepared to take such proceedings on their own account.

11. The Bill amends the National Minimum Wage Act 1998 so that enforcement officers do have the power to issue enforcement notices which relate to past pay periods in the case of some or all of the past or present workers concerned.

COMMENTARY ON CLAUSES

Clause 1: Enforcement Notices

12. Clause 1 of the Bill deals with the power of enforcement officers to serve enforcement notices on employers for the recovery of the national minimum wage. The Clause inserts a new subsection (2A) after section 19(2) of the National Minimum Wage Act 1998.

13. The subsection will allow an enforcement officer to serve an enforcement notice on an employer imposing a requirement on him to pay a worker who has at any time qualified for the minimum wage arrears of pay in respect of one or more past pay reference periods. He will be able to serve such a notice whether or not he imposes, or could impose, a requirement on the employer to pay the worker the minimum wage for the future. So it will not matter if the worker no longer qualifies to be paid the minimum wage by that employer because, for example, he is no longer employed by that employer. The notice can relate to that worker only or, by virtue of section 19(3), to a number of workers. The same notice can therefore deal with any combination of past or future periods and past or current employees.

14. Enforcement officers will be able to issue notices by virtue of subsection (2A) for pay reference periods that ended before the passing of the Bill. But workers themselves are already entitled under the National Minimum Wage Act 1998 to bring claims in respect of such periods. So the Bill will not give workers any new entitlement to minimum wage arrears that they did not previously have.

15. The amendments made by the Bill to the National Minimum Wage Act 1998 will also have effect in the application of the Act to enforcement of the agricultural national minimum wage.

Clause 2: Short title, commencement and extent

16. Clause 2 provides for the Bill to have the same extent as the National Minimum Wage Act 1998, that is to say the whole of the United Kingdom.

     FINANCIAL EFFECTS OF THE BILL

     17. It is estimated that there will be no changes in public sector financial costs due to the Bill as it produces the result that was budgeted for.

     EFFECTS OF THE BILL ON PUBLIC SERVICE MANPOWER

     18. It is estimated that there will be no changes in public sector manpower due to the Bill as it produces the result that was planned for.

     SUMMARY OF THE REGULATORY APPRAISAL

19. The Regulatory Impact Unit have agreed that as the purpose of the legislation is to put on a legal footing what was already being done, there are no additional costs and benefits as a result of the Bill.

     EUROPEAN CONVENTION ON HUMAN RIGHTS

     20. Section 19 of the Human Rights Act 1998 requires the Minister in charge of a Bill in either House of Parliament to make a statement about the compatibility of the provisions of the Bill with the Convention rights (as defined by section 1 of that Act). The statement has to be made before second reading. The Lord Sainsbury of Turville has made the following statement—

         "In my view the provisions of the National Minimum Wage (Enforcement Notices) Bill [HL] are compatible with the Convention rights."

     COMMENCEMENT

     21. The National Minimum Wage (Enforcement Notices) Bill [HL] will come into force two months after Royal Assent.

 
 
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Prepared: 22 November 2002