Employment Bill [HL]

I am glad that the noble Baroness raised this. When I was trying to get my mind around it the other day, I went all the way back to my tax law at university to think about it. The distinction between expenses allowable for self-employment and those for employment is the word ““necessarily””. I tried to transpose that into the application here. This is not about tax law, but about what is or is not caught under an employer’s obligation under the National Minimum Wage Act. So if something was transposed into the national minimum wage that, in the minds of the noble Baroness and myself, would not have been incurred necessarily and was therefore not allowable under Schedule E taxation, it would be deemed remuneration for the purposes of the calculation of the national minimum wage. It would have nothing to do with the Revenue. It would be caught under that method of calculation. The employer would therefore be caught by the National Minimum Wage Act 1998. Now that word is being moved so that, although this type of expenditure would not be necessarily incurred—so it would be caught under Schedule E taxation and not allowable—here, and only in NMW terms, not Revenue terms, it will be deemed not to be remuneration. Therefore the employer does not get caught, is more minded to take on the voluntary worker and, in certain situations such as childcare, the voluntary worker can now do it. We leave them outside the NMW. If that was inside the HMRC but not the NMW environment, it would still fall foul of Schedule E and not be allowable because it was not incurred necessarily. What is important is not the taxation application, but the ““necessarily”” principle of taxation.