Ninth Standing Committee on Delegated Legislation
Wednesday 24 March 1999
[Mr. Frank Cook in the Chair]
Draft National Minimum Wage (Offshore Employment) Order 1999
4.30 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Dr. Kim Howells): I beg to move,
That the Committee has considered the draft National Minimum
Wage (Offshore Employment) Order 1999.
As ever, Mr. Cook, it is a pleasure to have you
presiding over the Committee. I am surprised that you
have not been airlifted already.
on Delegated Legislation
On 3 March, my right hon. Friend the Minister of State
for Trade and Industry, presented in Committee two sets
of draft regulations that implement the minimum wage.
They were passed by the House and will come into force
on 1 April. I now present a draft Order in Council, which
will extend the provisions of the National Minimum Wage
Act 1998 as well as implementing regulations to
people who work offshore.
Under the order, British and foreign workers who work
or, to follow the strict wording of the order, who
"ordinarily" work in the territorial waters of the United
Kingdom will qualify for the national minimum wage
from 1 May 1999 the date when the order comes into
force. The order will apply also to Britain and foreign
workers who work in the United Kingdom sector of the
continental shelf, where the work is connected with the
exploration or exploitation of the sea bed or its subsoil in
the United Kingdom sector, or where the work is
connected with the exploration or exploitation in a foreign
sector of the continental shelf of a cross-boundary
petroleum field.
In plain language, the order mainly covers work done
on oil or gas rigs in exploring for or producing oil and
gas. For the sake of completeness, I should make it clear
that exploration and production in the United Kingdom
sector is not confined to oil and gas reserves. It may
include other natural resources, such as coal, which the
order also covers.
Employers of those workers will be subject to the same
obligations as other employers under the National
Minimum Wage Act and the National Minimum Wage
Regulations 1999. They will be required to pay workers
at least the national minimum wage, and to comply with
other requirements relating to the calculation of minimum
wage pay and hours and the need to keep sufficient
records. Such workers will also have the right of access
to their relevant records if they believe that they are not
receiving the national minimum wage. They will be
entitled to bring a claim for failure to pay the national
minimum wage before an employment tribunal or other
civil court.
The draft order provides that tribunal claims will be
heard before tribunals in England and Wales, Scotland
and Northern Ireland, according to the offshore area
where the relevant act or failure to act took place. It does
not apply to workers on board ships that are in passage or
engaged in fishing or dredging; it does not need to.
Workers on board ships are dealt with already by the
National Minimum Wage Act. The Act entitles mariners
to the national minimum wage if they work on board
UK-registered ships, unless their employment is wholly
outside the United Kingdom or the person is not ordinarily
resident in the United Kingdom.
People may ask why it is necessary to extend the Act
to offshore oil workers. The oil and gas industry is not
normally associated with low pay. Until recently, when
the price of crude oil dropped significantly, the industry
has usually been described in terms of bonanza, boom
and riches. Those who have been employed offshore have
generally done very well from the exploitation of North
sea oil and gas. That remains true in probably 99 per cent.
of all cases.
Even in the richest sectors, however, there may be
pockets of low pay. Not everyone is an oil or gas engineer
or a construction worker. Someone has to do the less
well-rewarded jobs, such as cleaning, general
maintenance and refurbishing. Indeed, if one believes
press reports, the workers who paint North sea rigs are
paid as little as 81p an hour. Pay of 81p an hour is
unacceptable anywhere in the United Kingdom, whether
on the waters of the North sea or on dry land if such
stories are true. It is right that workers should receive the
minimum wage regardless of whether they are on dry land
or offshore. It is therefore right to extend the provisions
of the 1998 Act to offshore employment.
The draft order is straightforward. We have heard the
arguments of principle about the national minimum wage.
The national minimum wage will shortly become a reality
for workers on the mainland; it must be right to extend
the protection of the Act to offshore workers. I believe
that it is logical to do so. It complies with standard
practice. It means that the picture surrounding the national
minimum wage will be complete from 1 May, when the
order comes into force. I commend the order to the
Committee.
4.35 pm
Mr. Tim Boswell (Daventry): May I first welcome
you, Mr. Cook not for the first time, to the Chair of a
Committee considering employment matters. I also
welcome the Minister for Competition and Consumer
Affairs, who has not previously debated the matter in such
a context. It is always a pleasure to listen to his
explanations and, on occasion, to enjoy his beneficial
impact on the Welsh rugby team, which is beginning to
look up. I do not want to dilate on that. Nor do I wish to
re-fight the battles of last year, when Committee members
considered the principle of the national minimum wage.
Indeed, I concede the logic in my view it is misplaced
in extending the principle of the national minimum wage
to offshore employment. However, an untidiness that is
not uncharacteristic of the Department has evinced itself
again.
The main regulations come into play on 1 April an
appropriate date but those for offshore workers do not
come into force for another month. If it were to be for
one, as for the other, one would have expected the dates
to coincide, yet that is not so. The Government have had
more than a year to consider the implications of section
42 of the National Minimum Wage Act 1998 and its
extension, by Order in Council, to offshore employment.
On the general principle of the universality of the Act,
the Minister's averments have been somewhat dented by
the fiasco on au pairs. The Department has had to
scramble out from an embarrassing situation, and find a
way to exempt au pairs. I find that legally somewhat
implausible, and shall return to that in a different context.
Unless I have overlooked something, I slightly regret
the way in which the order has been thrown at us. I made
inquiries at the Vote Office when I received the definitive
print of the draft order, but it contains no regulatory
impact assessment. Nor, except in the most general terms,
has the Minister sought to explain how the order bites.
I concur with the Minister, consistent with out debates
last year, that the order does not have a heavy impact on
what might be termed oil industry production workers. It
is more likely to relate to ancillary services, some of
which may be poorly paid. However, there appears to be
no paper annexed to the document stating how many
employees it is estimated will be caught, or what will be
the relative difference to their pay and, therefore, the
concomitant costs to industry.
As the Minister conceded, the North sea industry has
been doing relatively badly recently. However, the signs
are that oil prices will improve. That may have other
implications; if the industry is looking up, the changes
that the Minister proposes may take the edge off the
sector's profitability, or even prevent its return to
profitability. I remind the Minister that, by definition,
profitability operates at the margin. The sector has not
been doing particularly well; additional burdens, however
small, are at the margin, and unwelcome.
Having mentioned general points, I turn to the details
of the order. It is a pleasure to have the Minister's fresh
mind on these matters, although we regret the absence
of his right hon. Friend the Minister of State, because
of illness.
Painful questions must be asked to ensure that we get
the measure right. The Minister can perhaps update the
Committee after last year's debates, as my first question
refers to when part of a rig is in another jurisdiction. I note
that yesterday's independent law reports said that where
contracts are held will be of interest to lawyers. The
inference of the Minister's remarks was that the test of
whether an employee falls within the ambit of the national
minimum wage is where he works ordinarily or, possibly,
where his contract is held. The fact that it has gone for a
walk to the other end of the rig, as it were, and straddles
two jurisdictions makes no difference to the need to pay
the minimum wage at all times. It would be pretty difficult
to calculate the figures otherwise.
It might be helpful if the Minister could say whether
other countries with an adjacent continental shelf extend
their national minimum wage arrangements, if they have
them. Are there other dovetailing jurisdictions?
My second point refers to the inspectorate. During the
passage of the National Minimum Wage Act 1998, we
debated who would be carrying out inspections? I am not
aware of wage inspections taking place, but I am sure
that the Minister will have made some arrangements for
ensuring enforcement, if such inspections were anything
more than a purely fictional exercise. What about the
serving of penalty notices, as prescribed in the legislation?
When someone goes offshore, it is a little difficult to do
that, as workers are not always in one place. Will the
Minister enlighten the Committee on whether there are
special arrangements for monitoring, which is the role of
the inspector, and explain how notices will be served?
The issue of the jurisdiction between England, Scotland
and Northern Ireland seems, to my lay eye, to be
reasonably straightforward, and I shall not press the
Minister on it.
I have two comments to make about the definition of
the application of the order. The Minister mentioned its
interaction with maritime activities, such as taking a ship
across the continental shelf, or fishing. I am a bit
concerned about whether there is a clear functional
distinction between dredging in the sense of pipe-laying,
and ordinary dredging. It could be a dual-purpose activity
or one might be disguised as the other. We could get into
some arcane legal wrangles about when a dredger was
laying a pipe and when it was merely carrying out
dredging operations. That, as they say, was a note that I
prepared earlier.
A further point arose out of the Minister's remarks,
which bears on a subject for which I once had some
responsibility. I refer to sea-bed dredging for aggregates,
such as sand and gravel. They are definitely winning
assets from the sea bed, but that activity is not the normal
dredging operation to keep a navigation channel open.
I am not sure whether it would be covered under the
maritime test or this test, or whether there is a certain
awkwardness in the jurisdiction.
I have two further points to make, on the order, one of
which refers to article 2(4), which states:
"This Order applies to individuals whether or not they are British
subjects, and to bodies corporate whether or not they are
incorporated under the law of the United Kingdom" .
I do not quite understand the third part of article 2(4),
under which the order will apply
"even when the application may affect their activities outside the
United Kingdom."
Many things that happen outside the United Kingdom
affect the activities of companies, even those registered in
the United Kingdom. Will the Minister clarify what is
envisaged by that rather Delphic pronouncement?
A final point of detail relates to the offences procedure.
The order apparently contains a filter by which the
Secretary of State must approve
"any proceedings on an offence connected with employment"
offshore. I can find no similar filter for employment
onshore, where such proceedings are not required to go
before the Secretary of State for approval, although his
officer might be involved in bringing a prosecution.
Will the Minister explain whether that provision is a
matter of form or whether a special procedure is required
for the Secretary of State to tick off such cases for
example, because they might be regarded as being
politically sensitive, because they might involve joint
jurisdiction, or because of their offshore nature? I am sure
that the Minister would not want to suggest that he wishes
to reward his friends offshore, or his former friends
offshore. However, as a famous newspaper might say,
"We should be told" .
Those matters struck me as they would I hope a
reasonable person considering the detail of the order. The
Minister must get this draft order right, so he should
explain any difference, such as those that I have
suggested, between what happens onshore and what
happens offshore. He must explain whether those
awkward definitional problems about what is, or is not,
offshore activity are properly expressed in the order.
It will be no secret to the Minister or his hon. Friends
that we do not like the concept of a minimum wage. We
think that the intrusion of law into the contractual and
other relationships between employees and their
employers is not helpful. However, given that he is in for
a penny or, more accurately, in for a pound he might
as well be in for the extra penny, as provided by statute,
and extend the minimum wage offshore. We shall listen
to what the Minister has to say and, indeed, to any other
contributions that hon. Members may make, and make our
dispositions accordingly at the end of the Committee's
deliberations.
4.47 pm
| 
