Employment Bill [HL]

I thank my noble friend Lord Wedderburn for raising this important issue. I do not know whether he will be pleased with my response, but that is for him to judge. We believe that working individuals should be appropriately protected whether they are employees, workers or self-employed. Today’s flexible labour market and changing working patterns mean that there is a wider variety of working arrangements than was the case in the past. There have been cases where it has been necessary for the courts to decide whether an individual is entitled to a particular right, and the body of employment law has been adapted and refined in the light of changing working arrangements. All that is a statement of the obvious, but it is perhaps important to put it on the record. The courts have developed a series of tests to determine an individual’s employment status. In such cases, the courts have regard for all aspects of the employment relationship, including whether the contract is illegal. Of course, the Government applaud my noble friend’s desire to improve and clarify enforcement of employment law rights. We are not sure that this amendment—it may not just be the wording—does that. First, the amendment requires a judgment which the courts already need to, and do, make in such cases about the level of an employee or worker’s participation in any illegality. Such a test is a fine judgment and in each case will depend on the particular facts. In many ways, that must be for the court to decide. For this reason, it would be difficult to attempt to enshrine in legislation a matter of interpretation which could apply to all types of working arrangement or, in other words, all contracts of employment. Secondly, since the courts in such cases must already look at both the legality of a contract and at a worker’s participation in any illegality, we do not think that the amendment is necessary. We of course support the broad principle that no worker should be penalised where he or she had no knowledge—and ought not to have had any knowledge; that is an important point that the amendment does not address—of the illegality concerned, but this is a question already addressed by the courts every day. Once a court judgment has been made on a particular set of circumstances, and has not been successfully appealed, that interpretation stands. Case law can be good or bad, proving that it is a flexible tool. However, the Government are not convinced that this change would be of great practical benefit. I want to make it quite clear that the Government support the broad principle that, in such cases, the worker or employer should not be deprived of their remedy when any illegality did not involve them and they did not know about it. Because this is a complex area, I will point out one or two of the complexities that the Government see. One is the position, which may be rare, where an employee perhaps ought to have known. Another is the position around the tax consequences of the amendment if it became part of law. Other parts of government will clearly need to consider the consequences of putting this in primary legislation, which will take some time. My offer to my noble friend, and I am not sure that he can expect any more from me today, is that my officials and I would be more than happy to meet with him and his supporters on the amendment to discuss the matter further. I want to make it clear that it is my present view that there is no way that we will be ready for anything like this—even if we were to agree to it—by either Report or Third Reading. But we can talk about my noble friend’s ideas and wording and see if we can move things forward on it. I appreciate that that is not the answer that the noble Lord wanted to hear. It may, however, be rather more than he expected to hear.