Memorandum by the Department of Trade and Industry

INTRODUCTION

The main areas covered by this Bill are paternity and adoption leave and pay, maternity leave and pay, employment tribunal reform, and procedures for handling disputes between employers and employees. The Bill also covers equal pay questionnaires, statutory rights for trade union learning representatives, rights for workers on fixed-term contracts, introduction of work-focused interviews for partners of benefit claimants, and information exchange for employment and training purposes.

Following a Government amendment to the Bill in the Commons Committee, the Bill also introduces a right for employees who have young children to request flexible patterns of work, and an obligation on employers to consider these requests seriously.

OVERVIEW OF REGULATION-MAKING POWERS

This Bill brings together a variety of Government policies relating to employment matters. Among other things, it introduces new employment rights and extends some existing ones. In line with the existing legislative framework, it takes powers in primary legislation to define much of the detail of these rights in secondary legislation. It therefore contains a relatively large number of regulation and order-making powers, which are a mixture of affirmative and negative resolution. The clauses which contain such powers are listed in the table at Annex A. This Memorandum goes into most detail on those powers which the Department considers to be particularly significant and therefore likely to be of most interest to the Committee. These are:

Clause 1: Paternity leave

Clause 2: Statutory paternity pay

Clause 3: Ordinary and additional adoption leave Clause 4: Statutory adoption pay

Clause 31: Adjustment of tribunal awards for non-compliance with the statutory dispute resolution procedure

Clause 45: Fixed term work

Clause 47: Right to request flexible working

Clause 49: Work-focused interviews for partners

Section 1 of this Memorandum (below) therefore deals with these major regulation-making powers in some detail, covering the purpose of each power, why it is appropriate for the issue to be delegated to secondary legislation, and the timetable for bringing forward and consulting on the regulations.

The remaining regulation-making powers in the Bill are less substantial, in the view of the Department. They consist of amendments to existing powers, and some new powers which are more minor and technical. In some cases the powers are precautionary and there are presently no plans to use them. These regulation-making powers are considered in a less detailed way in Section 2 of this Memorandum. The Department stands ready to supply more detail to the Committee on any of these powers, if this summary is not sufficient.

TIMETABLE AND CONSULTATION INTENTIONS

Because of the wide-ranging nature of the Bill's subject matter, the timetables for drafting, consulting and implementing regulations vary from policy area to policy area. This memorandum sets out any definite or provisional timetables under the relevant clauses. At present, only the regulations on fixed term workers have been drafted and put out to public consultation. In other areas, in the absence of actual drafts, the following accounts explain the policy direction of each set of regulations.

CLAUSE 1: PATERNITY LEAVE

Overview

This clause establishes provision for the introduction of a new statutory right to two weeks' paternity leave. Paternity leave will be available to fathers following the birth of a child or to one parent when a child is newly-placed for adoption.

The clause sets out provisions which are similar in construction to the provisions in the Employment Rights Act 1996 (ERA) relating to parental leave and maternity leave and they will be inserted into the ERA. Existing primary legislation on parental and maternity leave rely heavily upon the use of secondary legislation and this clause is constructed similarly. The Secretary of State is empowered to make regulations in a number of areas, including qualifying conditions for employees, extent of leave, rights during and after leave and notification. In all cases, these regulatory-making powers closely mirror those, which exist in relation to parental and maternity leave in the ERA.

We believe the clause contains an appropriate balance between primary and secondary legislation, allowing for flexibility by leaving much the same details for regulations, which will be subject to affirmative procedure, as for parental and maternity leave. The adoption of a division between primary and secondary legislation similar to that in respect of parental and maternity leave will allow any future changes (for example changes to notice periods) to the maternity leave scheme, to be mirrored for paternity leave in the same way, through regulations, and to the same timescale. It is noteworthy that in some cases (see below - 80A subsections (3) and (5)(c), the Opposition in Commons Standing Committee argued for the Secretary of State's regulatory power to be widened so that more could be done through regulation rather than on the face of the Bill.

Consultation

The new right to paternity leave has been the subject of extensive consultation. The Government launched a review of maternity and parental rights in the early summer of 2000, which led to the publication, in December 2000, of the Green Paper 'Work and Parents: Competitiveness and Choice'[2] The Green Paper put forward a range of options to balance improving choice for parents and enhancing competitiveness for business. Paternity leave was the second most popular option in the Green Paper (after increasing the period of paid maternity leave), supported by both parents and employers.

Following the Green Paper consultation, the Government published three framework document[3], in May 2001, setting out in detail the preferred options for simplification of maternity leave, paternity leave and adoption leave, and which formed the basis of a further three month public consultation.

Regulations

Draft regulations are not yet available. It is expected that draft regulations will be published before the Bill gains Royal Assent and it is intended that they will be subject to public consultation.

Regulations made under clause 1 of the Bill will be subject to affirmative procedure.

Regulatory-making powers in the clause

80A Entitlement to paternity leave: birth

This new section establishes the right to paternity leave when a child is born and sets out the criteria which must be satisfied for a parent to qualify for paternity leave.

Subsection (1) identifies the kinds of qualifying conditions that an employee must satisfy to be eligible for paternity leave. It gives the Secretary of State the power to make regulations setting the precise terms that an employee must satisfy concerning:

• his period of service with his employer;
• his relationship with the new-born child; and
• his relationship with the child's mother

It is intended that the service qualification will be for an employee to have been in continuous employment with the same employer for at least 26 weeks into the 15th week before the week in which the baby is due. Regulations concerning the employee's relationship with the new-born child and the child's mother will reflect the intention that paternity leave should be available to an employee who expects to be parenting a new-born child. It is envisaged that the regulations will take a broadly similar approach to the parental leave regulations, which incorporate the concept of parental responsibility. It is intended that the eligibility criteria relating to the relationship with the mother will enable both married and unmarried partners to benefit from time-off work to build a relationship with their new child and support their partner, providing they satisfy the fundamental test that they will be parenting the child.

Subsection (2) gives the Secretary of State the power to make regulations to set the extent of an employee's entitlement to leave and when leave may be taken. Subsection (3) specifies that regulations will grant paternity leave for a period of at least 2 weeks. Following debate in the Commons Standing Committee (Hansard, column 284), Minister of State Alan Johnson agreed to re-consider subsection (3) as originally drafted. Members of the Committee had called for more flexibility than it would have allowed. Consequently, the Government tabled an amendment at Report to remove the stipulation in subsection (3) as originally drafted that paternity leave must be taken as a single period, and introduced flexibility in subsection (5)(c) to vary the way in which leave can be taken.

Subsection (4) specifies that regulations will allow paternity leave to be taken within a period of at least 56 days from the child's birth. It is intended that regulations will require paternity leave to be taken within 56 days of the date of the child's birth or expected week of childbirth whichever is the longer, but the Government will seek further views on this issue during consultation on the draft regulations. It is intended that if a father notifies his employer of his intention to start his leave from the birth of his child, he will be able to do so whether the child is born early or late.

Subsection (5) sets out what regulations under subsection (1) may cover. Paragraph (a) allows regulations to detail what types of activity meet the definition of caring for the child or supporting the mother. It is planned initially to adopt the same light-touch approach as has been applied to similar powers in respect of parental leave. Guidance on the way in which leave might be used will be provided, rather than formally specified in regulations. These are not, therefore, powers that the Secretary of State expects to wish to use. However, paternity leave is an entirely new right, and it is not possible to foresee exactly how it will come to be used in practice. Paragraph (a) allows the Secretary of State to make regulations in this area in the event that it becomes necessary to do so, for example as the result of misuse or exploitation at the margin. Paragraph (b) allows the Secretary of State to regulate in relation to the length of leave available in cases of multiple births. It is intended that regulations will follow the same approach as for maternity leave, where a single period of leave is available whether one or more children are born as the result of the same pregnancy.

Following an amendment at Report, as called for in the Standing Committee, paragraph (c) allows regulations to detail how paternity leave can be taken. Initially it is intended that regulations will give fathers the flexibility to choose whether to take a single period of leave of either 1 or 2 weeks' duration, but the Government will seek further views on this issue during consultation on the draft regulations.

80B Entitlement to paternity leave: adoption

This new section establishes the right to paternity leave when a child is newly placed for adoption and defines the criteria which must be satisfied for a parent to qualify for paternity leave. The right to leave and the qualifying conditions will match as closely as possible those which apply when a child is born. The provisions of this section are therefore very similar to those in new section 80A.

Subsection (1) identifies the kinds of qualifying conditions that an employee must satisfy to be eligible for paternity leave. Regulations will set the precise terms that an employee must satisfy concerning:

• his period of service with his employer;
• his relationship with the newly-placed child; and
• his relationship with the child's adopter

It is intended that the service qualification will be that an employee must have been in continuous employment with the same employer for at least 26 weeks into the week in which a match is made with a child for adoption. Regulations concerning the employee's relationship with the child newly placed for adoption and the adoptive parent will reflect the intention that paternity leave is to be available to an employee who expects to be parenting the newly placed child. It is envisaged that regulations will take a broadly similar approach to the parental leave regulations, which incorporate the concept of parental responsibility. In terms of defining the relationship with the other parent, it is intended that where a married couple adopt, the partner who is not taking adoption leave will be able to take paternity leave. It is also anticipated that where an individual adopts, a partner who intends to play a parenting role to the child will be able to take time-off work to build a relationship with the child and offer support to their partner. The scheme is being designed in such a way as to ensure that leave is only available in cases where a child is placed for adoption through the approved process which includes going through an approved adoption agency.

Subsection (2) gives the Secretary of State power to make regulations setting the extent of an employee's entitlement to leave and when leave may be taken.

Subsection (3) specifies that regulations will grant paternity leave for a period of at least 2 weeks. Following the debate in the House of Commons Standing Committee on the Employment Bill (Hansard, column 284) on new section 80A(3), the Government tabled an amendment at Report which was accepted, to allow more flexibility in specifying the way in which leave can be taken in subsection (5)(d), in a similar way as for paternity leave relating to new-born children.

Subsection (4) specifies that regulations will allow paternity leave to be taken within a period of at least 56 days from the child's placement. It is intended that regulations will require paternity leave to be taken within 56 days of the child's placement. It is intended that if an employee notifies his employer of his intention to start his leave from the placement of his child, he will be able to do so whether the child is placed earlier or later than expected.

Subsection (5) sets out what regulations under subsection (1) may cover. Paragraph (a) allows regulations to detail what types of activity meet the definition of caring for the child or supporting the adoptive parent. As for paternity leave in respect of a new-born child (80A(5)(a)), the Secretary of State does not intend to regulate in this area unless it proves necessary to do so. Paragraph (b) allows the Secretary of State to make regulations to ensure that an employee cannot take both adoption and paternity leave in respect of the same child. Paragraph (c) allows regulations to ensure that an employee who has taken paternity leave in respect of one child, cannot also take paternity leave in respect of another child placed as part of the same arrangement. Following an amendment in Report, as called for in the Commons Standing Committee, paragraph (d) allows the Secretary of State to detail in regulations how paternity leave can be taken. Initially, it is intended that regulations will give employees the flexibility to choose to take leave of either 1 or 2 weeks' duration, but the Government will seek further views on this issue during consultation on the draft regulations.

Subsection (8) allows regulations to be made to cover inter-country adoptions. Arrangements for inter-country adoptions can vary considerably from those in the UK and from country to country. In particular, the concept of a placement for adoption which is used in this part of the Bill may not apply to overseas adoptions. In making regulations under this subsection, the Secretary of State will ensure that Government Departments, notably DTI and DoH, work closely together and in consultation with key stakeholders. The scheme is being designed in such a way as to ensure that paternity leave will only be available to parents who have followed the approved process, including going through an approved adoption agency.

80C Rights during and after paternity leave

This new section allows the Secretary of State to make regulations concerning an employee's rights during and after paternity leave taken in relation to either a new-born child or a child newly placed for adoption.

Subsection (1) provides for regulations to address what happens to an employee's terms and conditions whilst he is on paternity leave and to provide for his right to return from paternity leave.

 Subsections (2) to (7) enlarge upon these powers.

It is intended that the right for paternity leave will reflect the provisions which apply to women whilst on and returning from ordinary maternity leave. As paternity leave is for a maximum period of 2 weeks, it is intended that an employee will be entitled to all contractual benefits except wages / salary whilst taking 1 or 2 weeks' paternity leave. We intend that in most cases, as with maternity leave, an employee will have the right to return to the same job following an absence of 1 or 2 weeks' paternity leave.

80D Special cases

This section gives the Secretary of State the power to make regulations about dismissal and redundancy of an employee who is on paternity leave. However, subject to consultation, it is not anticipated that specific provisions will be made to deal with cases where an employee is dismissed or made redundant for reasons unrelated to his paternity leave. In this respect, paternity leave may depart from the precedent of maternity leave (in respect of which regulations impose certain specific obligations on employers).

 80E Chapter 3: supplemental

This new section details the areas which may be covered by regulations made by the Secretary of State under the sections on entitlement to paternity leave. It follows the format adopted in respect of parental leave in the ERA.

Provisions in paragraphs (a), (b), (c) and (d) give the Secretary of State power to make regulations concerning notice, evidence, procedures and record-keeping. In general, it is planned to adopt a light-touch approach to paternity leave, for example no new offence is being created where an employee claims or takes paternity leave when he is not in fact entitled, though it may of course be a disciplinary matter for his employer. The Secretary of State does not, therefore, expect to make use of all of the provisions in paragraphs (a), (b), (c) and (d), with the exceptions noted below. However, paternity leave is a new right and whilst levels of misuse and exploitation are expected to be low, the Secretary of State may need to make regulations in these areas should it become necessary to do so in the light of experience.

The Secretary of State does intend to make regulations under the powers granted in paragraph (a) to require employees to give notice of their intention to take paternity leave. It is intended that employees will be required to notify their employer of their intention to take paternity leave and the date on which they intend to take leave using a simple, standard self-certificate. Notification will be either in the fifteenth week before the baby is due for paternity leave in relation to a new-born child, or within a week of issue of a matching certificate for paternity leave in relation to a child newly-placed for adoption (or, in both cases, as soon as reasonably practicable).

The Secretary of State also intends to make use of the powers under paragraph (c) to provide in regulations that an employee will not have the right to take paternity leave unless he has given his employer the appropriate notice.

Paragraph (e) allows the Secretary of State to make regulations to ensure that employees who have a contractual entitlement to paternity leave which goes beyond the statutory right are not entitled to both their contractual and statutory rights. It is intended that employees and employers will not be allowed to agree contracts which offer less than the statutory right.

Paragraph (f) enables the Secretary of State to address how time-off on paternity leave is treated for the purposes of calculating a week's pay in the ERA. Chapter 2 of Part 14 of the ERA sets out how a week's pay is to be calculated for an employee in different circumstances, for example when an employee's pay varies depending on the number of hours worked. Paragraph (f) will allow regulations to address the effects of paternity leave being taken during the period when a week's pay is calculated. This is relevant, since how a week's pay is calculated determines how much an employee is entitled to be paid, for example in redundancy pay or time-off to look for work upon notice of redundancy.

Paragraph (g) gives the Secretary of State powers to apply, modify or exclude other enactments in relation to employees who are entitled to paternity leave. The Secretary of State does not expect to use these relatively standard powers unless any anomalies between this clause and any past or future enactments arise.

Paragraph (h) allows the Secretary of State to deal in regulations with special and unforeseen circumstances should any arise. This is appropriate as primary legislation cannot cover in detail all the possible circumstances involving paternity leave.

CLAUSE 2: STATUTORY PATERNITY PAY

Overview

The object of this clause is to establish a new statutory right to 2 weeks' Statutory Paternity Pay following the birth of a child or placement of a child for adoption. This will provide a measure of earnings replacement to help fathers to take time-off work following the birth or placement of a child.

The clause sets out provisions to be inserted into the Social Security Contributions and Benefits Act 1992 which are similar in construction to provisions in that Act relating to Statutory Maternity Pay. The Secretary of State is empowered to make regulations in a number of areas, including specifying the relationship the employee must have to the child and the child's mother or adopter, notification periods and rates of Statutory Paternity Pay.

In the main, the new provisions reflect existing primary legislation on Statutory Maternity Pay - they deal with the same matters, and leave the same details for regulations - but there are a few key exceptions, including rates of pay, which are to be set out entirely in regulations. The majority of regulations made under these new provisions will be subject to negative procedure, again with the key exception of Statutory Paternity Pay rates, which will be subject to affirmative procedure. As with paternity leave, the development of the new right to Statutory Paternity Pay has reflected the operation of Statutory Maternity Pay as closely as possible. Adopting a division between primary and secondary legislation similar to that in respect of Statutory Maternity Pay will allow future changes (for example changes to pay rates) to Statutory Maternity Pay to be mirrored for Statutory Paternity Pay in the same way, through regulations and to the same timescale.

Consultation

The new right to paternity pay has also been the subject of extensive consultation, and was similarly covered in the review of maternity and parental rights in the early summer of 2000 which led to the publication of the Green Paper 'Work and Parents: Competitiveness and Choice' (see above).

Regulations

It is hoped that draft regulations will be available before the Bill gains Royal Assent and it is intended that they will be subject to public consultation. As paid paternity leave has already been subject to extensive consultation, this further consultation is likely to be of a technical nature and therefore relatively short.

Regulations made under clause 2 of the Bill will be subject to negative procedure, with the exception of statutory pay rates, which will be subject to affirmative procedure.

Regulatory-making powers in the clause

171ZA Entitlement: birth

This new section establishes the right to Statutory Paternity Pay in the event of the birth of a child and sets out the criteria which must be satisfied for an employee to qualify for paternity pay.

Subsection (2) sets out the qualifying conditions that an employee must satisfy to be eligible for Statutory Paternity Pay. Subsection (2)(a) gives the Secretary of State the power to make regulations setting the precise terms that an employee must satisfy concerning:

• his relationship with the new-born child; and
• his relationship with the child's mother

It is intended that the regulations will mirror those relating to paternity leave. As for paternity leave, it is envisaged that the regulations will take a broadly similar approach to the parental leave regulations, which incorporate the concept of parental responsibility. It is intended that the eligibility criteria relating to the relationship with the mother will enable both married and unmarried partners to benefit from pay to help them to take time-off work to build a relationship with their new child and support their partner, providing they satisfy the fundamental test that they will be parenting the child.

171ZB Entitlement: adoption

This new section establishes the right to Statutory Paternity Pay where a child is newly placed for adoption and sets out the criteria which must be satisfied for a parent to qualify for paternity pay. The conditions match as closely as possible those which apply when a child is born but there are some necessary differences.

Subsection (2) sets out the qualifying conditions that an employee must satisfy to be eligible for Statutory Paternity Pay. Subsection (2)(a) gives the Secretary of State the power to make regulations setting the precise terms that an employee must satisfy concerning:

• his relationship with the child placed for adoption; and
• his relationship with the adoptive parent

As for Statutory Paternity Pay relating to a new-born child, it is intended that regulations will match those relating to paternity leave - statutory pay will be available to an employee who expects to be parenting a child newly placed for adoption. The same safeguards as for leave will be built in to ensure that Statutory Paternity Pay is only available in cases where a child is placed for adoption through the approved process which includes going through an approved adoption agency.

Subsection (5) gives the Secretary of State the power to make regulations covering situations where a married couple adopts jointly. In such cases, only one spouse will be entitled to Statutory Adoption Pay and the other will be entitled to Statutory Paternity Pay (if they meet the eligibility criteria). The couple will be able to choose which spouse receives which statutory payment and the spouse choosing to receive Statutory Paternity Pay will confirm his choice on a simple self-certificate of entitlement. It is not anticipated that further regulations will be made in this area unless it becomes necessary to do so, for example as the result of misuse or exploitation at the margin.

171ZC Entitlement: general

Subsection (3) of this new section sets out what regulations the Secretary of State can make concerning entitlement to Statutory Paternity Pay.

Paragraph (a) allows regulations to modify the qualifying requirements relating to length of service, earnings and ceasing to work for the employer in certain cases. It is intended that regulations modifying these requirements will be made to cover special circumstances, for example where a child is born very prematurely, before the 14th week before the expected week of childbirth.

Paragraph (b) gives the Secretary of State the power to make regulations specifying whether the requirement to give notice applies in particular cases or applies in a modified form. It is intended that regulations modifying these requirements will be made to cover special circumstances, for example where a child is born after an employee notifies his employer of his intention to claim statutory paternity pay but before the date that he has stated as the start of his pay period.

Paragraph (c) provides for the Secretary of State to make regulations about the type of evidence of entitlement to paternity pay that is required. It is intended that a person will need to complete a simple self-certificate which can be used as evidence of entitlement to both leave and pay.

Paragraphs (d), (e) and (f) allow regulations to make provisions specifying where employment should be treated as continuous and earnings under more than one contract are to be aggregated. It is intended that regulations will follow those for Statutory Maternity Pay and set out that where an employee has two contracts with the same employer, and the separate earnings from each are below the Lower Earnings Limit, that the earnings can be added together and the employee can qualify for Statutory Paternity Pay. If an employee has unavoidable breaks, because of lack of work, the regulations will provide that those breaks don't break the continuity of employment.

Paragraph (g) allows the Secretary of State to make regulations about what payments are not to be included within the calculation of a person's earnings for the purposes of meeting the earnings qualification for Statutory Paternity Pay. Again, the intention is to follow the provisions for maternity pay.

171ZD Liability to make payments

This new section places responsibility for payment of Statutory Paternity Pay on the employer.

Subsection (2) requires the Secretary of State to make regulations to prevent employers from avoiding their liability by dismissing an employee wholly or partly to avoid paying Statutory Paternity Pay.

Subsection (3) allows the Secretary of State with the concurrence of the Inland Revenue to specify in regulations where the Inland Revenue will be liable for payment, for example if an employer becomes insolvent or bankrupt. In such cases, the Inland Revenue will only pay from the week of the employer's insolvency and any Statutory Paternity Pay due prior to this will remain the responsibility of the employer. The Inland Revenue will also take over liability where there has been a decision that the employer is liable to make payments and the employer doesn't pay within certain time limits, which will be set out in regulations.

171ZE Rate and period of pay

Subsection (1) enables the Secretary of State to fix the rates of payment of Statutory Paternity Pay in regulations. It is intended, that Statutory Paternity Pay will be paid at the same standard rate as Statutory Maternity Pay - from April 2003, this will be £100 per week or 90% of average weekly earnings if this is less. Initial regulations will be subject to affirmative procedure (paragraph 7 of Schedule 7). Any future changes to Statutory Paternity Pay rates, for example to reflect changes to Statutory Maternity Pay, can be dealt with as part of the general social security annual review exercise (paragraph 13 of Schedule 7) which is also subject to affirmative procedure. This means that any changes to the rates can be included in the social security up-rating order (which covers a wide range of benefits).

Subsections (2) provides that paternity pay will be for a period of 2 weeks. Following the debate in the Commons Standing Committee (Hansard, column 284) on new section 80A in clause 1, the Government tabled an amendment at Report, which was accepted, to allow more flexibility to set the way in which Statutory Paternity Pay can be taken. The amendment allows the Secretary of State to provide in regulations for pay to be taken in respect of separate blocks rather than one, and to vary the length of time following birth or placement, in which Statutory Paternity Pay can be taken. It is intended that initially regulations will provide for Statutory Paternity Pay to be paid in respect of a single period, of either one or two weeks' duration, but the Government will seek further views on this issue during consultation on the draft regulations.

Subsection (3) concerns the period in which paternity pay can be taken. Following the debate in the Commons Standing Committee, the Government tabled an amendment at Report to subsection (3), which was accepted, to set this period as a minimum, rather than (as originally drafted) an invariable period, of 56 days from the date of birth or placement of the child. It is intended that, as for paternity leave, regulations will provide for Statutory Paternity Pay to be available for a period of 56 days from the date of birth of the child, or the expected week of childbirth whichever is the longer; or from the date of placement of the child.

Subsection (4) gives the Secretary of State the power to make regulations about a person who works for more than one employer. It is intended that, as for Statutory Maternity Pay, regulations will cover the particular circumstances where a person works for two employers at the time he qualifies for Statutory Paternity Pay. It is intended that in such cases, a person will be able to claim Statutory Paternity Pay from one employer whilst working for the other employer.

Subsection (5) allows the Secretary of State to make regulations specifying when Statutory Paternity Pay is not payable in respect of a week. It is intended that, as for Statutory Maternity Pay, Statutory Paternity Pay will not be payable for weeks during which the claimant is receiving Statutory Sick Pay, is in legal custody or is dead.

171ZG Relationship with contractual remuneration

This new section allows employers to offset Statutory Paternity Pay payments against contractual remuneration due for the same period.

Subsection (3) gives the Secretary of State the power to make regulations specifying what may or may not be treated as contractual remuneration for this purpose.

171ZI Special classes of person

This new section enables the Secretary of State to make regulations dealing with the application of Statutory Paternity Pay to those employed or living outside the UK, mariners and continental shelf workers. Regulations will mirror those for Statutory Maternity Pay, for example an employee's entitlement to Statutory Paternity Pay will not be affected if he works for a multinational company and works abroad for a period during which his employer remains liable for secondary Class 1 NICs.

171ZJ Part 12ZA: supplementary

Subsection (3) provides the power to make regulations to treat people as employees when they would otherwise not be, and vice versa. Regulations to be made under this subsection are expected to mirror those for maternity pay.

Subsection (4) allows for regulations providing that two or more employers or two or more contracts of service are to be treated as one for the purpose of Statutory Paternity Pay. It is intended that regulations will mirror the position for Statutory Maternity Pay and National Insurance contributions, for example, if a person works for a company and a subsidiary of that company, he will be treated as working for one employer for the purposes of Statutory Paternity Pay.

Subsection (5) gives the Secretary of State the power to set a day other than Sunday as the beginning of a week for the purposes of this section (except 171ZE). It is not expected that regulations will be made in exercise of this power. However, if in the future a change becomes desirable, for example if a corresponding change is made for Statutory Maternity Pay, it would be appropriate to reflect this for Statutory Paternity Pay using the same legislative procedure.

Subsections (7) and (8) enable the Secretary of State to make regulations specifying how normal weekly earnings should be calculated to decide whether a parent qualifies for Statutory Paternity Pay and what should or should not be included in that calculation. This reflects the position for Statutory Maternity Pay.

Subsections (9) and (10) allow regulations to set out when contracts with two or more NHS trusts are to be treated as one for the purpose of qualifying for Statutory Paternity Pay. This ensures parents will not lose their entitlement as a result of changes in their contract from the establishment of a trust and reflects the approach taken for Statutory Maternity Pay.

Subsection (12) specifies that regulations made under subsections (4) to (10) of this new section must be made with the concurrence of the Inland Revenue.

171ZK Power to apply Part 12ZA to adoption cases not involving placement

New section 171ZK allows regulations to be made to cover inter-country adoptions. Arrangements for inter-country adoptions can vary considerably from those in the UK and from country to country. In particular, the concept of a placement for adoption, which is used in this part of the Bill may not apply to overseas adoptions. In making regulations under this new section, the Secretary of State will ensure that Government Departments, notably DTI and DoH, work closely together and in consultation with key stakeholders. Regulations will include appropriate safeguards to ensure that Statutory Paternity Pay is only available to parents who have followed the approved process, including going through an approved adoption agency.

CLAUSE 3: ORDINARY AND ADDITIONAL ADOPTION LEAVE

Overview

This clause introduces provision for a new statutory right to ordinary adoption leave and additional adoption leave. Ordinary adoption leave, followed by additional adoption leave, will be available to adoptive parents around the time of placement of a child for adoption.

The clause sets out provisions which are similar in construction to the provisions in the Employment Rights Act 1996 (ERA) relating to maternity leave and parental leave and they will be inserted into the ERA. Existing primary legislation on maternity and parental leave rely heavily on the use of secondary legislation and this clause is constructed similarly. The Secretary of State is empowered to make regulations in a number of areas, including qualifying conditions for employees, the length of ordinary and additional adoption leave, rights during and after leave and notification. In all cases, these regulatory-making powers closely mirror those which exist in relation to maternity and parental leave in the ERA.

As with clauses 1 and 2, we believe that this clause contains an appropriate balance between primary and secondary legislation, allowing for flexibility by leaving the same details for regulations, which will be subject to affirmative procedure, as for maternity and parental leave. The adoption of a division between primary and secondary legislation similar to that in respect of maternity and parental leave will allow this link to be maintained by allowing future changes, for example changes to notice periods, to the maternity leave scheme, to be mirrored for adoption leave in the same way, through regulations, and to the same timescale.

Consultation

The new right to adoption leave has also been the subject of extensive consultation, and was similarly covered in the review of maternity and parental rights in the early summer of 2000 which led to the publication of the Green Paper 'Work and Parents: Competitiveness and Choice' (see above).

Regulations

Draft regulations are not, as yet, available. It is hoped that draft regulations will be published before the Bill gains Royal Assent and it is intended that they will be subject to public consultation. Bearing in mind the extensive consultation to date, this consultation is likely to be of a more technical nature and hence relatively short.

Regulations made under clause 3 of the Bill will be subject to affirmative procedure.

Regulatory-making powers in the clause

75A Ordinary adoption leave

This new section establishes the right to ordinary adoption leave when a child is newly placed for adoption and provides for regulations to be made concerning an employee's rights during and after ordinary adoption leave.

Subsection (1) gives the Secretary of State the power to make regulations detailing the conditions an employee must meet to qualify for ordinary adoption leave. This reflects the situation for maternity leave where the Secretary of State details in regulations the conditions that must be met for a woman to qualify for maternity leave.

It is intended that ordinary adoption leave will be available to an employee with whom a child - up to the age of 18 years - is newly placed for adoption. The scheme is being designed in such a way as to ensure that only parents who have followed the approved process for adopting a child - including adopting through an approved agency - will be eligible for leave. Regulations will require that adoptive parents give their employers a matching certificate - issued only by approved adoption agencies - as proof of their eligibility for adoption leave. It is intended that parents who adopt children from overseas - again only where they have followed the approved process - will also be entitled to adoption leave. Similar provisions as for parents adopting children within the UK will apply, but for practical reasons there will be slight differences to some elements of the provisions, for example the concept of a placement for adoption may not apply to overseas adoptions.

For both domestic and overseas adoptions, adoptive parents will also need to satisfy a service requirement. As for paternity leave for adoptive parents, this will be continuous employment with the same employer for at least 26 weeks into the week in which the certificate matching them with a child is issued.

Where a married couple adopt a child, it is intended that only one partner will be able to take adoption leave. The couple will be able to choose whether the adoptive mother or father take adoption leave and the other partner will be able to take paternity leave (if he meets the eligibility criteria).

Subsection (2) gives the Secretary of State the power to make regulations setting the length of ordinary adoption leave. Ordinary adoption leave will be for the same period as the newly increased ordinary maternity leave - a period of up to 26 weeks. It is planned that an adoptive parent will be able to choose to start his leave either on the date of placement of his child or no earlier than two weeks in advance of the expected date of placement.

Subsection (3) enables regulations to be made to address what happens to an employee's terms and conditions whilst he is on ordinary adoption leave and to provide for his right to return from such leave. Subsections (4) to (7) define the scope of the enabling power.

As for ordinary maternity leave, it is intended that, during a period of ordinary adoption leave of 26 weeks, an adoptive parent will be entitled to all contractual benefits - except wages / salary - that he would have if still at work. It is also intended that, in most cases, as with maternity leave, an adoptive parent will have the right to return to the same job at the end of the period.

75B Additional adoption leave

This new section establishes the right to additional adoption leave when a child is newly placed for adoption and provides for regulations to be made concerning an employee's rights during and after additional adoption leave.

Subsection (1) allows regulations to be made detailing the conditions an employee must meet to be eligible for additional adoption leave. It is intended that additional adoption leave will only be available to an adoptive parent who has completed a period of ordinary adoption leave. Therefore, effectively the same conditions relating to the new placement of a child and service will apply as for ordinary adoption leave.

Subsections (2) and (3) provide for regulations regarding the length of additional adoption leave. As for the new, simplified system of additional maternity leave, additional adoption leave will be for a period of up to 26 weeks. The additional adoption leave period will immediately follow a period of ordinary adoption leave, giving adoptive parents up to one year off in total.

Subsection (4) makes provision for regulations to be made to address what happens to an employee's terms and conditions whilst he is on additional adoption leave and to provide for his right to return from such leave. Subsections (5) to (8) are incidental to this provision.

As for additional maternity leave, it is intended that, following a period of additional adoption leave of up to 26 weeks, an adoptive parent will be entitled to return to the same job or, if this is not reasonably practicable, another suitable job following an absence on additional adoption leave.

75C Redundancy and dismissal

This new section enables the Secretary of State to make regulations about dismissal and redundancy of an employee who is on adoption leave. It is intended that regulations will provide that adopters who are made redundant whilst on adoption leave will have the right to be offered alternative, suitable employment where available. This is the same protection as afforded to mothers on maternity leave.

75D Chapter 1A: supplemental

This new section sets out the areas, which may be covered by regulations made under the sections on entitlement to ordinary adoption leave and additional adoption leave. It follows the approach adopted for maternity leave in the ERA.

Paragraphs (a), (b), (c) and (d) give the Secretary of State the power to make regulations concerning notice, evidence, procedures and record-keeping. In general, it is planned to adopt a light-touch approach to adoption leave, for example no new offence is being created if an employee claims or takes adoption leave when he is not in fact entitled, though this may be a disciplinary matter for his employer. The Secretary of State does not, therefore, expect to make use of all of the provisions in paragraphs (a), (b), (c) and (d), with the exceptions noted below. However, adoption leave is a new right and whilst levels of misuse and exploitation are expected to be low, the Secretary of State may need to make regulations in these areas should it become necessary to do so in the light of experience.

The Secretary of State does intend to make regulations under the powers granted in paragraph (a) to require employees to give notice of their intention to take adoption leave. It is intended that employees will be required to notify their employer of their intention to take adoption leave and the date on which they expect leave to start within one week of receiving a certificate matching them with a child for adoption. Adoptive parents will be able to start leave up to 2 weeks prior to the expected date of placement of a child, providing they have given their employer 28 days notice, but not later than the date of placement. It is also planned to make it recommended practice in guidance for employees to notify their employers of their intention to take adoption leave when they are approved for adoption - this could be up to a year before an actual placement with a child takes place.

Matching certificates will only be issued by approved adoption agencies and will act as proof of an adoptive parent's right to take adoption leave - and to receive adoption pay. The certificate will set out the name of the adopters and in the case of married couples, identify which partner is taking adoption leave. Wherever possible, the certificate will include the expected date of placement.

It is envisaged that regulations made under paragraph (c) will provide that an employee will not have the right to take adoption leave unless he has given his employer the appropriate notice.

Paragraph (e) allows the Secretary of State to make regulations to ensure that employees who have a contractual entitlement to paternity leave which goes beyond the statutory right are not entitled to both their contractual and statutory rights. It is intended that employees and employers will not be allowed to agree contracts which offer less than the statutory right.

Paragraph (f) enables the Secretary of State to address how time-off on adoption leave is treated for the purposes of calculating a week's pay under the Employment Rights Act. Chapter 2 of Part 14 of the Employment Rights Act sets out how a week's pay is to be calculated for an employee in different circumstances, for example when an employee's pay varies depending on the number of hours worked. Paragraph (f) will allow regulations to address the effects of adoption leave being taken during the period when a week's pay is calculated. This is relevant because how a week's pay is calculated determines how much an employee is entitled to be paid, for example in redundancy pay or time-off to look for work upon notice of redundancy.

Paragraph (g) gives the Secretary of State powers to apply, modify or exclude other enactments in relation to employees who are entitled to adoption leave. The Secretary of State does not expect to use these relatively standard powers unless any minor anomalies between this clause and any past or future enactments arise.

Paragraph (h) allows the Secretary of State to deal with special and unforeseen circumstances in regulations should any arise. This is appropriate as primary legislation cannot cover in detail all the possible circumstances involving adoption leave.

CLAUSE 4: STATUTORY ADOPTION PAY

Overview

This clause introduces provisions for a new statutory right to 26 weeks' Statutory Adoption Pay around the new placement of a child for adoption. This will provide a measure of earnings replacement to enable parents to take time-off around the placement of a child for adoption.

The clause sets out new sections to be inserted into the Social Security Contributions and Benefits Act 1992 and is similar in construction to provisions in that Act relating to Statutory Maternity Pay. The clause makes provision for the Secretary of State to make regulations in a number of areas, including notification periods and rates of Statutory Adoption Pay.

Like the previous three clauses, the clause largely reflects existing primary legislation - it places similar detail in primary legislation, with fine detail for regulations - but there are a few key exceptions, including rates of pay, which are to be set entirely in regulations for Statutory Adoption Pay. The majority of regulations made under this clause will be subject to negative procedure, again with the key exception of Statutory Adoption Pay rates, which will be subject to affirmative procedure.

Consultation

The new right to statutory adoption pay has also been the subject of extensive consultation, and was similarly covered in the review of maternity and parental rights in the early summer of 2000 which led to the publication of the Green Paper 'Work and Parents: Competitiveness and Choice' (see above).

Regulations

It is hoped that draft regulations will be available before the Bill gains Royal Assent and it is intended that they will be subject to public consultation. As paid adoption leave has already been subject to extensive consultation, this further consultation is likely to be of a technical nature and therefore relatively short.

Regulations made under clause 4 of the Bill will be subject to negative procedure, with the exception of statutory pay rates, which will be subject to affirmative procedure.

Regulatory-making powers in the clause

171ZL Entitlement

This new section establishes the right to Statutory Adoption Pay when a child is newly placed for adoption and sets out the criteria which must be satisfied for a parent to qualify for adoption pay.

Subsection (8) of this section sets out what regulations the Secretary of State can make concerning entitlement to Statutory Adoption Pay.

Paragraph (a) of the subsection allows the Secretary of State to modify the qualifying requirements relating to length of service, earnings and ceasing to work for the employer in particular cases. It is intended that regulations modifying these requirements will be made to cover special cases, for example where a child is matched and placed for adoption within the same week.

Paragraph (b) gives the Secretary of State the power to make regulations specifying whether the requirement to give notice applies in particular cases, or applies in a modified form. It is intended that regulations modifying these requirements will be made to cover special circumstances, for example where a child is born after an employee notifies his employer of his intention to claim statutory paternity pay but before the date that he has stated as the start of his pay period.

Paragraph (c) provides for the Secretary of State to make regulations about the type of evidence of entitlement to adoption pay that is required. It is intended that an adopter will provide his employer with a certificate from an approved adoption agency confirming that a match has been made with a child. This will act as a safeguard to ensure that Statutory Adoption Pay is only available in cases where a child is placed for adoption through the approved process, which includes going through an approved adoption agency.

Paragraphs (d), (e) and (f) allow regulations to make provisions specifying where employment should be treated as continuous and earnings under more than one contract be aggregated. It is intended that regulations will follow those for Statutory Maternity Pay and set out that where an employee has two contracts with the same employer, and the separate earnings from each are below the Lower Earnings Limit, that the earnings can be added together and the employee can qualify for Statutory Adoption Pay. If an employee has unavoidable breaks, because of lack of work, the regulations will provide that those breaks don't break the continuity of employment.

Paragraph (g) allows the Secretary of State to make regulations about what payments are not to be included within the calculation of a person's earnings for the purposes of meeting the earnings qualification for Statutory Adoption Pay.

Paragraph (h) enables regulations to cover situations where a married couple adopts jointly. In such cases, one spouse will be entitled to Statutory Adoption Pay and the other will be entitled to Statutory Paternity Pay (if they meet the eligibility requirements). The couple will be able to choose which spouse receives which statutory payment and the matching certificate will include information on which spouse has elected to receive Statutory Adoption Pay. It is not anticipated that further regulations will be made in this area unless it becomes necessary to do so, for example as the result of misuse or exploitation at the margin.

171ZM Liability to make payments

This new section places responsibility for payment of Statutory Adoption Pay on the employer.

Subsection (2) requires the Secretary of State to make regulations to prevent employers from avoiding their liability by dismissing an employee wholly or partly to avoid paying Statutory Adoption Pay.

Subsection (3) allows the Secretary of State with the concurrence of the Inland Revenue to specify in regulations where the Inland Revenue will be liable for payment, for example if an employer becomes insolvent or bankrupt. In such cases, the Inland Revenue will only pay from the week of the employer's insolvency and any Statutory Adoption Pay due prior to this will remain the responsibility of the employer. The Inland Revenue will also take over liability where there has been a decision that the employer is liable to make payments and the employer doesn't pay within certain time limits, which will be set out in regulations.

171ZN Rate and period of pay

Subsection (1) enables the Secretary of State to fix the rates of payment of Statutory Adoption Pay in regulations. It is intended that Statutory Adoption Pay will be paid at the same standard rate as Statutory Maternity Pay - from April 2003, this will be £100 per week or 90% of average weekly earnings if this is less. Initial regulations will be subject to affirmative procedure (paragraph 7 of Schedule 7). Any future changes to Statutory Adoption Pay rates, for example to reflect changes to Statutory Maternity Pay, can be dealt with as part of the general social security annual review exercise (paragraph 13 of Schedule 7), which is also subject to affirmative procedure. This means that any changes to the rates can be included in the social security up-rating order (which covers a wide range of benefits).

Subsection (5) gives the Secretary of State the power to make regulations about a person who works for more than one employer. It is intended that, as for Statutory Maternity Pay, regulations will cover the particular circumstances where a person works for two employers at the time he qualifies for Statutory Adoption Pay. It is intended that in such cases, a person will be able to claim Statutory Adoption Pay from one employer whilst working for the other employer

Subsection (6) allows the Secretary of State to make regulations specifying when Statutory Adoption Pay is not payable in respect of a week. It is intended that, as for Statutory Maternity Pay, Statutory Adoption Pay will not be payable for weeks during which the claimant is receiving Statutory Sick Pay, is in legal custody or is dead.

171ZP Relationship with benefits and other payments etc

Subsections (1) to (3) provide for regulations to deal with the interaction between Incapacity Benefit and Statutory Adoption Pay. The regulations will ensure that a person cannot get the full amount of Incapacity Benefit on top of Statutory Adoption Pay. Both Incapacity Benefit and Statutory Adoption Pay are intended to replace earnings so it is right that Incapacity Benefit should only be payable to the extent that it exceeds Statutory Adoption Pay. If no Incapacity Benefit is payable, the period of Statutory Adoption Pay will still count towards the qualifying period for the long-term rate of Incapacity Benefit so adoptive parents will not lose out. This is broadly in line with the position for Statutory Maternity Pay.

Subsection (6) gives the Secretary of State the power to make regulations specifying what may or may not be treated as contractual remuneration for the purposes of offsetting Statutory Adoption Pay payments against contractual remuneration due for the same period.

171ZR Special classes of person

This new section enables the Secretary of State to make regulations concerning the application of Statutory Adoption Pay to those employed or living outside the UK, mariners and continental shelf workers. Regulations will mirror those for Statutory Maternity Pay, for example an employee's entitlement to Statutory Adoption Pay will not be affected if he works for a multinational company and works abroad for a period during which his employer remains liable for secondary Class 1 NICs.

171ZS Part 12ZB: supplementary

Subsection (3) provides the power to make regulations to treat people as employees when they would otherwise not be, and vice versa. Regulations are expected to mirror those for maternity pay.

Subsection (4) allows for regulations providing that two or more employers or two or more contracts of service are to be treated as one for the purpose of Statutory Adoption Pay. It is intended that regulations will mirror the position for Statutory Maternity Pay and National Insurance contributions, for example, if a person works for a company and a subsidiary of that company, he will be treated as working for one employer for the purposes of Statutory Adoption Pay.

Subsection (5) gives the Secretary of State the power to set a day other than Sunday as the beginning of a week for the purposes of this section (except 171ZN and 171ZP). It is not expected that regulations will be made in exercise of this power. However, if in the future a change becomes desirable, for example if a corresponding change is made for Statutory Maternity Pay, it would be appropriate to reflect this for Statutory Adoption Pay using the same legislative procedure.

Subsections (7) and (8) enable the Secretary of State to make regulations specifying how normal weekly earnings should be calculated to decide whether a parent qualifies for Statutory Adoption Pay and what should or should not be included in that calculation. This reflects the position for Statutory Maternity Pay.

Subsections (9) and (10) allow regulations to set out when contracts with two or more NHS trusts are to be treated as one for the purpose of qualifying for Statutory Adoption Pay. This ensures parents will not lose their entitlement as a result of changes in their contract from the establishment of a trust and reflects the approach taken for Statutory Maternity Pay.

Subsection (12) specifies that regulations made under subsections (4) to (10) of this new section must be made with the concurrence of the Inland Revenue.

171ZT Power to apply Part 12ZB to adoption cases not involving placement

New section 171ZT allows regulations to be made to cover inter-country adoptions. Arrangements for inter-country adoptions can vary considerably from those in the UK and from country to country. In particular, the concept of a placement for adoption, which is used in this part of the Bill may not apply to overseas adoptions. In making regulations under this new section, the Secretary of State will ensure that Government Departments, notably DTI and DoH, work closely together and in consultation with key stakeholders. Regulations will include appropriate safeguards to ensure that Statutory Paternity Pay is only available to parents who have followed the approved process, including going through an approved adoption agency.

CLAUSE 31: ADJUSTMENT OF TRIBUNAL AWARDS FOR NON-COMPLIANCE WITH THE STATUTORY DISPUTE RESOLUTION PROCEDURE

Overview

Clause 31 contains provisions requiring employment tribunals to vary compensatory awards for failures to complete the statutory procedures set out in schedule 2 before an application is made.

Unless there are exceptional circumstances, the variation must range between 10% and 50% of the award. However, in exceptional circumstances where a variation on that scale would be unjust or inequitable, tribunals may vary the award by less than 10% or make no award at all. The jurisdictions to which this clause applies are listed in schedule 3.

Regulations

However, a number of more detailed provisions, more appropriately dealt with in regulations, are also needed to deal with the particular situations that will arise in some of the cases to which the requirement to follow the statutory procedures will apply. Accordingly, subsection (5) of the clause enables the Secretary of State to make a number of provisions by regulations, which by virtue of clause 49 will be subject to the affirmative resolution procedure. Subsection (5) is intentionally wide ranging. We want to have the flexibility to cover the very many different situations which will arise in the workplace and be subject to the operation of clause 31. We also want the flexibility to amend the regulations if necessary in the light of the operation of the legislation. Administrators are in the process of drafting instructions to lawyers on the regulations. There will be public consultation on draft regulations. Examples of the Government's initial thinking are set out below to assist the Committee, but these will be subject to further refinement.

Subsection 5(a): provision about the application of the statutory procedures.

This will enable us to specify the circumstances in which the statutory procedures contained in schedule 2 apply. For example, we envisage that the dismissal and disciplinary procedure (DDP) will apply to the dismissal of an employee on any ground. The DDP should also be used be used in relation to disciplinary action against an employee personally on the grounds of conduct or capability. The modified DDP will be used in respect of certain "summary" dismissals on grounds of gross misconduct.

The Internal Grievance Procedure (IGP) is to be used by an employee with a grievance about an act of his employer against him that does not amount to discipline such as unlawful discrimination or an underpayment of wages; this would include action which leads to him to contemplate resigning and claiming that he has been constructively dismissed.

An employee should be regarded as having raised a grievance for the purposes of the application of the IGP to proceedings he brings under a particular jurisdiction if the ground, or one of the grounds, of complaint in the grievance he raised was in substance the same as the ground on which the tribunal proceedings are brought.

The regulations will also address how the procedures should apply to the particular case of constructive dismissal.

Subsection (5)(b): provision about when a statutory procedure is to be taken to be completed

The statutory procedures will normally be taken to be completed only when all the steps of the appropriate procedure set out in Schedule 2 have been complied with (the practical effect of this is that the employee will have to appeal under step 3 of the full procedures and step 2 of the modified DDP). However, if one party breaches any of the steps the other party will be entitled to regard the procedure as closed. (see (c) below) but note the DDP exception mentioned in (c) below.

Subsection 5(c): provision about what constitutes compliance with a requirement of a statutory procedure

 This power enables us to say when the procedural steps are and are not to be taken to have been complied with; for example, by identifying the circumstances in which an employee is to be regarded to having taken "all reasonable steps" to attend a meeting.

We envisage that both steps of the modified procedures for summary dismissal and grievances raised after dismissal must be taken in order to comply with them.

As the steps are sequential, a breach by either party of any of them is intended to mean that there is no obligation on either party to follow the remainder of the steps and that the steps taken before the breach are nugatory.

Subsection (5)(d): provision about circumstances in which a person is to be treated as not subject to, or as having complied with, such a requirement

The employee will not be obliged to instigate the IGP or comply further with the requirements of a DDP or IGP that has been instigated where he satisfies the tribunal that there were exceptional circumstances having the result that it is unreasonable to expect him to have done so. We are thinking here, for example, of a grievance being about sexual assault by a member of management or other conduct of a serious nature, or of the Step 2 meeting being conducted in an abusive manner by the employer.

Where the employer does not arrange the Step 2 meeting or, assuming an appeal, the Step 3 meeting we envisage that there should be the possibility of him being treated as though he had complied with the three steps if there were genuine sound reasons that made it difficult for him to hold any meeting within the foreseeable future. The test is intended to cover difficulties in holding the meeting that result from the behaviour, characteristics or circumstances of the employee. These are examples of the circumstances that we intend to cover -

• it is impossible to make contact with the employee, for example, because he has left the country,
• the employer has a reasonably based fear that the employee would use violence or seriously abusive language,
• serious long-term illness or incapacity such as to make attendance impracticable or undesirable (as in the case of a highly infectious or contagious disease).

There is intended to be a similar test for the employee. He should not have to attend a Step 2 or Step 3 meeting the employer arranges where there were genuine sound reasons that made it difficult for him to attend any meeting within the foreseeable future, for example, he has a reasonably based fear that the employer will act violently or use seriously abusive language or behaviour at the meeting, or where he knows that the third bullet in the last paragraph applies to him.

Where this test is met by the employer or employee, there should be no further obligation on either party to comply with the three steps.

We also intend to cater for the fact that there may be good reasons why an employee cannot in practice attend a meeting that it is in principle convenient for him to attend. For example, he may suddenly become ill, there may be an unexpected train strike or a person the employee is entitled to have accompany him under sections 10 to 13 of the Trade Union and Labour Relations (Consolidation) Act 1992 may not be able to attend (it is not intended that the operation of the three steps should affect the employee's entitlement under those sections). In view of this the policy is that the employer must be under a continuing obligation to arrange (or rearrange) the meeting so long as it was not reasonably practicable for the employee to attend any previously arranged meeting. It follows that the employer would cease to be under an obligation to arrange a Step 2, or as the case may be Step 3, meeting when, for the first time, the employee failed to attend a meeting that it was reasonably practicable for him to attend.

Where the employee has been dismissed and initiates Step 3 of the DDP after the end of the last day on which he worked for the employer, or initiates it on or before that day, but no arrangements have been made before the end of that day for a meeting, we envisage that the employer should have the option of holding a Step 3 meeting or simply responding as in Step 2 of the modified grievance procedure. That is to say, by setting out his response to the appeal in writing and sending it to the employee.

Where the statutory procedures are being followed in relation to a disciplinary matter or a grievance is being followed at the termination of employment it may be the case that the employee terminates his employment for a reason entirely separate from the discipline or grievance being dealt with (e.g. the employee resigns for domestic reasons). In that case if Step 2 of the full IGP has not been completed at termination, compliance with Step 2 of the modified procedure after the termination should we think be sufficient for the employer (and of course the employee) to be regarded as if he had complied with the IGP. We also think that if Step 2 of the full IGP has been completed at termination, that should be sufficient i.e. no further procedures should be necessary and any further procedures that have taken place should be disregarded.

It is not intended that the IGP is to apply in relation to any tribunal complaint made by an employee where, before the making of the complaint, the grievance that is the subject matter of the complaint has been raised formally as a collective grievance by a trade union with the employer, if the union was at the time recognised for the purposes of collective bargaining in respect of employees that included the complaining employee, and the grievance was raised on behalf of the employee and other employees having the same grievance.

For rather similar policy reasons, it is not intended that the DDP should apply in relation to the dismissal of an employee on the ground of redundancy where the dismissal was one of a number of dismissals proposed on that ground to take place within a certain period, such that when proposed they attracted the obligation to consult employees' representatives under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (consultation on collective redundancies).

We also want to make special provision about what employees with certain disabilities need to do in order to comply with the steps

Subsection (5)(e): provision for a statutory procedure to have effect in such circumstances as may be specified by the regulations with such modifications as may be so specified

We envisage that on occasion when we come to make the regulations we may discover circumstances where it would be sensible to make some adjustment to the procedures. Clause 31(5)(e) will give us this flexibility.

By way of example, we might want to allow for a delay in the disciplinary procedure where an employee under notice of dismissal made an application to a tribunal for interim relief while the procedure was taking place. This is because the outcome of the application could affect the decision of the employer to dismiss.

This would be a modification of the procedure because the timing of the meetings under the procedures is required to be "reasonable".

Interim relief is available where the tribunal thinks the employer may have dismissed for certain "automatically unfair" reasons, for example union membership and making a public interest disclosure.

Subsection (5)(f): make provision about when an employee is required to exercise a right of appeal under a statutory provision

In order to complete the full procedures, employees will be required to appeal under step 3 of the full procedures and step 2 of the modified procedure except where the employer has breached a previous stage of the procedure.

The Government intends to consult widely on the draft regulations to ensure that they achieve clarity without being over-prescriptive. There will be pre-consultation with key user groups, such as the employment tribunal judiciary, ACAS, and employer and employee organisations.

CLAUSE 45: FIXED TERM WORK

Overview

This clause places a duty on the Secretary of State to make regulations to transpose the EU Fixed Term Work Directive (Directive 99/70/EC) and also enables the regulations to ensure that fixed term employees are not discriminated against in terms of pay and pensions. The directive aims to improve the quality of fixed term work by applying the principle of non-discrimination to those in fixed term employment and to prevent abuses arising from the use of successive fixed term contracts. The UK Government takes the view that the equal treatment provisions in the fixed term work directive cannot apply to pay, but has decided to use primary legislation to prevent pay and pensions discrimination against fixed term employees in the light of evidence of pay disparities between fixed term and permanent employees. This follows the approach taken in respect of directive 97/81/EC on part-time workers, which was transposed via a similar power contained in section 19 of the Employment Relations Act 1999.

Consultation

The draft Fixed Term Employees (Prevention of less favourable treatment) Regulations, which will be made under this clause, were published in draft for consultation on 21 January 2002, ahead of the debate on this clause in Commons Committee. A twelve-week consultation on these regulations is now underway and will finish on 15 April. The directive is due to be transposed by 10 July 2002. The regulations are to be made via the affirmative procedure.

Regulations

The regulations state that an employer can treat fixed term employees less favourably than comparable permanent employees where the treatment is objectively justified, in line with the directive. They provide in particular that less favourable treatment in relation to particular contractual terms will be justified where the fixed term employee's overall package of terms and conditions is no less favourable than the comparable permanent employee's. The same qualifying periods for employment benefits will have to apply to fixed term as permanent employees unless this can be objectively justified.

This clause allows the measures limiting the use of successive fixed term contracts, in order to prevent abuse, to be varied by collective and workplace agreements. The draft regulations place a statutory limit of four years on the use of successive fixed term contracts except where further fixed term contracts can be objectively justified. The regulations will also allow the statutory mechanism to be varied by collective and workplace agreements.

The draft regulations amend sections 29, 65, 86, 92, 95, 97, 105, 108, 109, 136 and 197 of the Employment Rights Act 1996 and schedule 11 of the Social Security Contributions and Benefits Act 1992. These amendments will remove provisions in existing legislation that treat some or all fixed term employees less favourably than permanent employees. This will ensure that all fixed term employees have rights to statutory sick pay, guarantee payments and payments on medical suspension on the same basis as permanent employees and remove the redundancy payments waiver, which only applies to fixed term employees. It will give employees on such "task contracts" a number of statutory rights, on the same basis as employees working under permanent contracts or other types of fixed term contracts. These rights include the right not to be unfairly dismissal; the right to a written statement of reasons for dismissal; and the right to statutory redundancy payments.

CLAUSE 47: FLEXIBLE WORKING

Overview

This clause will provide parents of young children with a statutory right to apply for flexible working. It will specify the procedure that employers will have to follow when considering requests and the acceptable business grounds for refusing a request.

Under the new right, the initial onus will be on the parent to set out the working pattern they wish to adopt and explain the effect that they envisage it will have on the employer. The parent and employer will then meet to discuss the request and, if it cannot be met, to consider alternatives. The employer will give the employee a written decision. If the parent is not satisfied with the employer's decision they will be able to appeal. An employer will only be able to reject an application on specific business grounds that appear in the legislation. The employer will have to explain in writing to the parent the reasons why the grounds apply in relation to the particular application. The procedure looks to encourage both parties to resolve a disputed request at the work place and the Government believes every effort should be made to do so. It is the Government's intention that alternative dispute resolution mechanisms should be available to both parties and we intend for ACAS to widen their binding arbitration scheme to cover requests for flexible working.

Where cases reach an employment tribunal, employers will need to demonstrate that they have gone through the procedure - including having held meetings and having given a written explanation of their business grounds for refusing the request to the parent. The tribunal will verify whether the employer has followed all the proper procedures and will examine any disputed facts relating to why the business ground for refusal applies. Tribunals will not have the power to question the commercial validity of the employer's decision, but will be able to send the case back to the employer for reconsideration where the procedure has not been followed correctly or where the employer has failed to explain why the business ground applies. The tribunal may also order compensation.

Consultation

The flexible working provisions have been the subject of extensive consultation and follow closely the recommendations made by the Work and Parents Taskforce. Flexible working was raised as a key issue during the consultations surrounding the publication of the Green Paper 'Work and Parents: Competitiveness and Choice' in December 2000. The Green Paper put forward options based on giving some parents an automatic right to work reduced hours. Some parents, however, said that such options were not always their desired solutions, especially given the corresponding reduction in pay. Employers said an automatic right to reduced hours was a step too far.

The Government, therefore, decided not to proceed with an automatic right to work reduced hours. It established the Work and Parents Taskforce, as an independent body, to examine how to meet parents' desire for more flexible work patterns in a way that is compatible with business efficiency. The Taskforce's recommendations[4] and the Government's response[5], in which it accepted or accepted in principle each of the recommendations, were published at the end of November.

Recognising that the right granted by clause 47 will be an entirely new right, it is not possible to foresee exactly how employers and employees will deal with it in practice. The Government therefore has accepted the Work and Parents Taskforce recommendation to commence a review of the right three years after it comes into force.

Regulations

Draft regulations are not yet available. It is expected that draft regulations will be available by Summer 2002 and will be subject to a public consultation. In keeping with the drafting of the primary legislation, the regulations will follow the recommendations of the Work and Parents Taskforce as closely as possible.

Regulations made under clause 47 sections 80F, 80H and 80I will be subject to the negative procedure. Regulations made under section 80G will be subject to the affirmative procedure.

Regulatory-making powers in the clause

80F Statutory right to request contract variation provides for the right for parents to make an application for a change of their terms and conditions of employment to work flexibly and sets out the eligibility criteria.

Subsection 80F(1)(a) identifies the type of changes to his terms and conditions of employment a qualifying employee may seek from his employer. These will relate to the hours the employee is required to work; the times the employee is required to work and where he is required to work as between his home and the place of business. It gives the Secretary of State the power to extend by regulation the scope of the changes to his terms and conditions an employee can request. The purpose of this power is to provide the clause with 'flexibility' by ensuring that it can be extended to cover new flexible working patterns that may emerge in the future. Working patterns have changed immeasurably over the past couple of decades and it is impossible to say how things may change in the coming years. For example, due to technological advances many more people now have the opportunity to work from home.

Subsection 80F (1)(b) states that the right to make applications will only be for the purposes of caring for a child with whom the employee has a relationship of a prescribed kind. It provides for the kind of relationships it covers to be described in regulations. It is intended that this will cover anyone who has responsibility as a parent of an eligible child. For example, biological parents, adoptive parents, and new partners of parents where they share the responsibility for caring for the child. It is not the intention that the ability to apply for flexible working should extend as far as anyone who lives in the same house as the child but does not have responsibility for caring for the child e.g. grandparents, aunts, uncles (unless they specifically have parental responsibility).

Subsection 80F (5) provides the Secretary of State with a power to make regulations concerning the form of an employee's application to work flexibly. It is the intention that the regulations will require applications to be in writing (whether it is paper or electronic) and detail the issues that must be covered. One of the aims of the new right is to encourage employees to think about the effect of their request on their employer before they make it. Requiring applications to be in writing will play an important part in ensuring that this is achieved and help avoid spurious requests that would otherwise waste employers' time. The regulations will also clarify when an application is to be taken as made. The prescribed procedure, which both employees and employers will need to follow when dealing with a request for flexible work, will set out time limits to be complied with. Establishing the point at which an application has been made will start the clock ticking and is therefore essential.

Parents will be entitled to make an application in respect of a child up to fourteen days before his six birthday (or if disabled eighteen). The age of six has been chosen to cover two periods when the need for making requests are expected to be high; that is, the time following the child's birth and when the child starts school. Subsection 80F(6) allows the Secretary of State to amend by order the age "cut-off" of the child. It is not the Government's intention to make use of this power in the short-term. The Government will initiate are view the right three years after it comes into force. One of the questions it will ask employers is whether they have extended the application of the right, for example to parents of older children.

Subsection 80F(8)(a) gives the Secretary of State the power to require employees to have worked for a certain amount of time before qualifying for the right. The intention is that the regulations will follow the Work and Parents Taskforce recommendation of 26 weeks continuous employment with an employer.

80G Employer's duties in relation to application under section 80F places a duty on employers to consider requests for a flexible work pattern from eligible parents and provides for the procedure that they will have to follow when considering such requests.

Subsection 80G(1)(a) establishes that an employer will need to deal with a request made under section 80F in a way prescribed by the Secretary of State. Regulations that will be made under this power are specified in subsection 80G(2) and described below.

Subsection 80G(1)(b) lists the business grounds on which an employer may refuse a request. The list covers all the grounds identified by the Work and Parents Taskforce. Provision 80G (1)(b)(ix) provides the Secretary of State with a power to add to this list should other grounds be identified.

Subsection 80G(2) sets out matters to be included in regulations made under section 80G(1)(a) . It will also ensure that the detail of the procedure, which it is not appropriate to be specified in primary legislation, appears in a single source. The matters covered are listed at provisions (a) - (n) of the subsection:

(b)  Provides for the holding of a meeting between the employer and the employee to discuss an application for flexible working within 28 days of the application being made. It is intended that the regulations will clarify how the meeting is to be arranged.

(a)  Provides for the giving by the employer to the employee of notice of his decision on the application within fourteen days after the date of the meeting in (a). The intention is that the regulations will require the employee to be informed in writing of the decision.

(b)  Provides for notice under (b) of a decision to refuse the application to state the grounds for the decision. The grounds will be one or more of those detailed in 80G(1)(b).

(c)  Provides for the employee to have a right to appeal against their employer's decision and requires that this should be within fourteen days after the date on which notice is given under (b). It is the intention that the regulations will also allow for the appeal to be heard as part of an employer's established procedure to handling appeals for other issues, as long as the timescales are no less than the appeal procedure specified within the regulations under this clause.

(d)  Provides for the procedure for exercising the right of appeal and includes a provision to require the employee to set out their grounds for appeal. It is intended that these reasons may include concerns that the procedure has not been followed, that the business reasons for rejecting the request have not been sufficiently explained, or that a fact in the explanation of the business reasons is incorrect.

(e)  Provides for the notice under (b) to include information relating to the right of appeal (provided under (d)).

(f)  Provides for an appeal meeting between the employer and employee to discuss the appeal which must be held within 14 days of the employees notification of their intention to appeal. The intention is that the regulations will require that the appeal is held with a more senior manager wherever possible. It will recognise, for example, that this will not always be the case for small businesses.

(g)  Provides for the giving by the employer to the employee of notice of his decision on the appeal within fourteen days after the date of the meeting in (g). The intention is that the regulations will explain the points that the employer should cover when informing the employee of the outcome of the appeal. The notice will have to be in writing and it is intended that the employer will have to give an explanation of their reasoning, building on earlier communication.

(h)  Provides for notice under (h) of a decision to dismiss an appeal to state the

(i)  reasons for the decision.

(j)  Provides for a statement under (c) or (i) to contain a sufficient explanation of the grounds for the decision. The intention is that when an employer is unable to accept a request just stating the business reason alone will not be sufficient. They will need to back up the business ground for refusing a request with an explanation of their rationale. It is envisaged that a couple of paragraphs would usually be sufficient and guidance accompanying the right will provide a variety of examples covering a number of sectors.

(k)  (k) & (l) Provides an employee with the right to be accompanied at meetings and sets out who this companion may be. The Taskforce recommended that this should be a fellow employee, friend or appropriate recognised trade union representative. The right to be accompanied under this right would therefore be different to the right to be accompanied to disciplinary or grievance hearings under the Employment Relations Act 1999. The Government recognises the Taskforce's aim of not wanting to unduly limit the people who could accompany the parent and there preference for a wider formula that encompass all expertise in this area. The Government will consult on this specific point in order to allow the issues of consistency versus wider expertise to be fully explored.

(l)   Provides for companions to have a right to paid time off when accompanying the parent.

(m)  Provides for rights that apply to companions set out in sections 11 to 13 of the Employment Relations Act 1999 to be able to apply to companions of parents under this right. For example, ensuring the companion is protected from detriment or dismissal.

Subsection 80G (3) sets out matters that may be included in regulations under 80G(1)(a)

(a)  Provides for any requirement of the regulations not to apply where an application is disposed of by agreement or is withdrawn. For example, it may be that the employer feels that they can accommodate a request. In such circumstances they are in an immediate position to confirm to the employee their acceptance of the request and a meeting may be unnecessary.

(b)  Provides for the time limits to be extended in certain circumstances or where the employer and employee agree. It may be that in the course of the initial meeting an alternative working pattern is identified but further information is needed to ensure that it is workable. It might not always be possible in the circumstances for this information to be obtained within the two weeks the employer has to notify the employee of the decision. In cases where the parties agree to an extension, the regulations will specify how the agreement is to be handled and recorded.

(c)  Provides for the application to be treated as withdrawn in some circumstances. The intention is that where an employee fails to comply with the procedure then the employer should be able to conclude that the employee no longer wishes to pursue the request to work flexibly.

Subsection 80G (4) provides the Secretary of State with the power to amend, by order, subsection (2). It is not the Government's intention that this power should be used in the short-term. It may be that in the light of experience the procedure will need amending. This power will provide a mechanism to do so. The Government's intention is to commence a review of this new right three years after it has come into force.

Subsection 80(H)(3) does not allow an application to be taken to a tribunal until an employer informs the employee that their appeal has been rejected or that there has been a failure by the employer to fulfil their duties when considering a request. The regulatory power under subsection 80H(3)(b) provides the Secretary of State to specify what breaches of the procedure by the employer would allow a case to be taken to tribunal. The intention is to avoid cases being taken to tribunal where the failure to follow the procedure is minor or the result of a genuine mistake that did not affect the decision. The Government plans to explore further what these breaches should be when we consult on the draft regulations.

Section 80I(b) provides tribunals with the power to order the employer to pay compensation to the employee for failing to follow the procedure for considering a request or providing a business ground with an explanation of the rationale for why it applies. The compensation awarded is to be based on an employee's weekly pay and will be such an amount that the tribunal considers just and equitable in the circumstances. However, the Government plans to make use of the power provided for in subsection 80I(3) to limit the compensation to a maximum number of weeks' pay. The Work and Parents Taskforce were silent on the actual level of compensation in their report and the Government plans to consult widely on what the number of weeks should be.

CLAUSE 49: WORK-FOCUSED INTERVIEWS FOR PARTNERS

Overview

Clause 49 introduces a requirement for partners of working age benefit claimants, who are themselves of working age, to take part in a work-focused interview as a condition of continued entitlement to the full amount of certain benefits. Failure of the partner to take part in an interview without good cause will result in the application of a sanction on the benefit payable to the claimant. The interview will provide partners with the opportunity to discuss their skills and experience, the barriers they face in moving closer to the labour market and the help and support that is available to overcome those barriers. The measure will not place any requirement on partners beyond taking part in an interview. They will not be required to attend training courses or seek work.

The clause inserts new section 2AA into the Social Security Administration Act 1992 ("the Administration Act"), building upon section 2A which was inserted by section 57 of the Welfare Reform and Pensions Act 1999 and which introduced the requirement for certain benefit claimants to attend work-focused interviews. It allows the Secretary of State to prescribe in regulations that where a higher rate of a specified benefit is payable to a person by reference to his partner, both that the partner shall be required to take part in a work-focused interview and that the claimant's benefit can be reduced by way of a sanction if the partner fails, without good cause, to take part in a work-focused interview.

The first set of regulations will be subject to the affirmative resolution procedure.

Regulations

Subsection (1) will allow the Secretary of State to make regulations which impose a requirement on partners of claimants for certain benefits (listed at subsection (2)), where the benefit payable to the claimant is payable at a higher rate by reference to the partner, to take part in a work-focused interview as a condition of continuing entitlement to the full amount of that benefit. Subsection (3) prescribes when a higher rate of such a benefit is deemed to be payable to a person by reference to his partner, thereby requiring the partner to take part in an interview.

Subsections (4) to (6) of the proposed section 2AA set out in more detail the ways in which it is intended that the regulation-making powers in the new section might be exercised.

Subsection (4)(a) will allow regulations to provide that where someone is entitled to two or more relevant benefits, their partner will only be required to take part in one work-focused interview which will count for the purpose of each such benefit.

Subsection (4)(b) will allow regulations to prescribe which partner, or that each partner, will be required to take part in a work focused interview where a benefit claimant has more than one partner (ie. in a case where a claimant has entered into a valid polygamous marriage abroad and is living in the same household with some or all of his partners).

Subsection (4)(c) will allow regulations to determine the persons who will conduct the interviews with partners. The intention is to provide for the possibility that work-focused interviews, as well as being conducted by persons acting on behalf of the Secretary of State (most commonly employees of the Department for Work and Pensions), may also be conducted by employees of a local authority or private or voluntary sector employee contracted to provide services to that organisation.

Subsection (4)(d) will allow regulations, which confer power on representatives of the Secretary of State to determine where and when interviews will take place. It is the intention that most interviews will take place at a range of easily accessible sites, but the proposed regulations will make clear that home visits will be allowed where this would be more appropriate than expecting the claimant to visit an office.

Subsection (4)(e) will allow regulations to specify the circumstances in which a partner is to be treated as having either taken part or not taken part in the interview. It is proposed that the regulations will set out that the test of whether a partner has taken part will be (i) whether they attend an interview at the time and place specified and (ii) answer questions in areas relevant to their employment prospects, such as educational qualifications, previous work history and current barriers to taking up employment.

Subsection (4)(f) will allow regulations to provide for a benefit sanction to ensue if a partner (or the benefit claimant) fails to show good cause for the partner not taking part in a work-focused interview when asked to do so. It is intended that where a partner fails to take part in an interview, without good cause, there will be a reduction in the amount of benefit in payment to the claimant.

Subsection (4)(g) will allow regulations to specify what constitutes good cause for not taking part in the interview. It is proposed that the regulations will prescribe circumstances such as where someone is too ill on the day of the interview to attend or where a person has misunderstood the requirements placed upon them because of language, learning or literacy difficulties. The provision will be non-exhaustive to allow those undertaking interviews the flexibility to take individual circumstances into account. This approach of taking regulation-making powers to set out what constitutes good cause also follows the precedents in regulation 30 of the Jobseeker's Allowance Regulations 1996 (S.I. 1996/207) which covers the requirement for a claimant for a jobseeker's allowance to attend an employment office and regulation 14 of the Social Security (Work Focused Interviews) Regulations 2000 (S.I.2000/897); regulation 7 of the Social Security (Work Focused Interviews for Lone Parents) and Miscellaneous Amendments Regulations 2001 (S.I.2000/1926) and regulation 13 of the Social Security (Jobcentre Plus Interviews) Regulations 2001 (S.I.2001/3210), which cover good cause for failure to take part in a work-focused interview.

Subsection (5) will allow regulations to prescribe the manner in which the amount of reduction in benefit under subsection (4)(f) will be calculated, how the reduction will be applied and how long it will last for.

Subsection (5)(a) will allow regulations to specify the method by which the reduction will normally be calculated and subsection (5)(b) will allow regulations to provide that the amount of the reduction may be restricted in prescribed circumstances. This power would be used where the amount of the reduction would otherwise be greater than the amount of benefit in payment.

Subsection (5)(c) will allow regulations to specify that where a reduction would apply in respect of more than one benefit, the extent to which the reduction is to apply to each such benefit whilst ensuring that the total reduction does not exceed the amount calculated in regulations under subsection (5)(a). It also allows for regulations to prioritise the benefits against which the sanction may apply.

Subsection (6) will allow regulations to prescribe the circumstances in which the requirement to take part in an interview need not apply.

Subsection (6)(a) will allow regulations to prescribe the circumstances in which the requirement to take part in a work-focused interview is not to be applied, either permanently or until a specified time. It is intended to use this power to exempt partners of people who are claiming the benefits listed in subsection (2) but who are themselves claiming a relevant benefit and therefore, are required to take part in a work-focused interview in their own right.

Subsections (6)(b) and (c) will allow regulations to provide for the requirement to take part in work-focused interviews to be postponed where it is determined that an interview would not be appropriate at the designated time, or waived altogether. It is not intended that regulations will specify which categories of persons should have their interviews deferred or waived. Decisions will be made taking into account the particular circumstances that each individual faces in deciding whether or not it is appropriate to waive or defer the requirement to take part in an interview.

Schedule 7, inter alia, makes consequential amendments to the Social Security Administration Act 1992 and to the Social Security Act 1998.

Paragraph 9 of Schedule 7 amends section 2B of the Administration Act. By amending the definition of "relevant decision" for the purposes of that section, it will allow regulations to confer a right of appeal on claimants and partners against decisions made under regulations made by virtue of the new section 2AA that the partner has not taken part in a work-focused interview and has not shown good cause for not doing so. The amendments also ensure that all such decisions fall within the appeal procedures set out in Chapter II of the Social Security Act 1998.

Paragraph 10 amends section 2C of the Administration Act to ensure that the powers, which enable closer working between central and local government in order to make the delivery of social security benefits more customer-focused and better co-ordinated, also apply to interviews, which take place under the new section 2AA.

Paragraph 14 provides that the first set of regulations will be subject to the affirmative procedure. This is in recognition of the fact that much of the detail behind the powers taken in this primary legislation is to be contained in the secondary legislation, which the House should have the opportunity to debate.

Paragraph 49 amends the Social Security Act 1998 so as to clarify that the right of appeal is against the decision that the partner had failed to take part in an interview, rather than the decision to stop or reduce benefit.

Due to the innovative and sensitive nature of this requirement for partners of working age benefit claimants, there is a need to have the flexibility to adjust the various detailed aspects of the workings of the scheme in the light of experience of work-focused interviews.

No consultation has been conducted on this specific policy. However, the document "A Contract for Welfare: the Gateway to Work" set out the Government's Welfare to Work programme and included information about making it a condition of receiving benefit that claimants participated in a work-focused interview. The precedent set by work-focused interviews for claimants under the branding of ONE was used as the basis for the introduction of a similar requirement for lone parents, which in turn, is being used as the basis for work-focused interviews for partners. No further consultation is planned.

The Employment Bill contains a number of other clauses with regulation-making powers, in addition to those described in detail in section 1 above. The clauses are listed in full in the Annex. This section of the Memorandum gives a brief description of the main powers in these remaining clauses. It is not exhaustive. More information can be furnished if required.

PART 1

Clause 7 provides the Secretary of State with power to make regulations about employers' rights to recover, from the Exchequer, any statutory paternity and adoption pay that they pay out. Regulations under this clause will closely parallel existing regulations for the recovery of statutory maternity pay. Subsections (1) and (2) provide the power to make regulations to allow the Board of Inland Revenue to fund employers' payments of statutory paternity and adoption pay and set out the scope of those regulations. Regulations under subsections (1) and (2) will set in place the same system for recovering payments as currently exists for statutory maternity pay.

Subsection (4) provides the power to make regulations about the way in which statutory paternity and adoption pay will be recovered by employers. Regulations will allow the Board of Inland Revenue to make a payment to the employer to cover the statutory paternity pay and statutory adoption pay he is due to pay in advance of the point at which the employer makes payment to his employee, or in arrears. The amount may also be recovered by the employer from monies that he is due to pay over to the Board of Inland Revenue. Regulations will also allow the Board to recover from employers anything that is overpaid through an application for funding.

Regulations under this clause must be made with the concurrence of the Board of Inland Revenue and will be subject to the negative procedure.

Clause 8 provides the Secretary of State with power to make regulations setting out how employers will operate the new Statutory Paternity and Adoption Pay schemes, the records to be kept, information to be given to employees and the returns to be made to the Inland Revenue.

Subsection (1) gives the Secretary of State power to make regulations about the payment of Statutory Paternity Pay and Statutory Adoption Pay by employers. The regulations will set out clearly what employers' obligations are for keeping records and providing information to employees and the Inland Revenue. Subsection (2) specifically allows the Secretary of State to make regulations covering certain areas. It is intended that regulations under paragraph (a) will specify the records that employers will have to keep for the new schemes. Employers will only have to keep records similar in form and scope to those that they keep for Statutory Maternity Pay and the regulations will closely parallel extant regulations for Statutory Maternity Pay. It is intended that regulations under paragraph (b) will set out the rights of the Inland Revenue to inspect employers' records. These regulations will closely parallel the regulations that exist for the inspection of records relating to PAYE tax and National Insurance Contributions.

Regulations under paragraph (c) will set out what information employers will have to provide to their employees about the new schemes. Again, the regulations will closely parallel the extant regulations for Statutory Maternity Pay. Regulations under paragraph (d) will set out what returns employers will need to make to the Inland Revenue. It is intended that the existing annual returns process will be adapted to allow returns under this subsection to be made at the same time.

Regulations under this clause must be made with the concurrence of the Board of Inland Revenue and will be subject to the negative procedure.

Clause 9 places the new Statutory Paternity Pay and Statutory Adoption Pay schemes in the same regulatory framework as currently exists for Statutory Maternity Pay. It does this by amending the Social Security Contributions (Transfer of Functions, Etc.) Act 1999 ("the Transfer Act"). This Act effected the transfer of the former Contributions Agency to the Inland Revenue. Certain functions and powers of the Secretary of State for (then) Social Security were also transferred to the Board of Inland Revenue.

The amendments to the Transfer Act will permit an officer of the Board of Inland Revenue to make formal decisions about disputes as to liability and entitlement to Statutory Paternity Pay and Statutory Adoption Pay (pursuant to regulations to be made under section 8(1)(f) of the Transfer Act). This decision making process is that which exists currently for Statutory Maternity Pay. Later sections (10 and 13) of the Transfer Act, provide powers to make regulations governing those decisions, and appeals against them. The existing regulations made under these powers in the Transfer Act are the Social Security Contributions (Decisions and Appeals) Regulations SI 1999/1027. We intend that decisions and appeals relating to Statutory Paternity and Adoption Pay will be dealt with in exactly the same way as those relating to Statutory Maternity Pay.

Subsection (5) of clause 9 amends section 14 of the Transfer Act to extend the existing powers for the Board of Inland Revenue to make regulations under that section to Statutory Paternity Pay and Statutory Adoption Pay. Regulations under this section would allow disputes as to liability or entitlement to be dealt with on a provisional basis pending either a decision by an officer of the Board or the determination of an appeal against such a decision. This section currently applies, inter alia, to Statutory Maternity Pay. No regulations have been made under this section as it relates to Statutory Maternity Pay and we do not anticipate that any such regulations will be made. The powers in this section have been extended simply so that the new statutory payment schemes can operate in the same way as Statutory Maternity Pay.

Regulations made under section 8(1)(f) of the Transfer Act must be made by the Secretary of State with the concurrence of the Board of Inland Revenue. Regulations under sections 10, 13 and 14 of the Transfer Act are made by the Board of Inland Revenue, in the case of section 13, with the concurrence of the Lord Chancellor and the Scottish Ministers. Regulations are subject to the negative procedure.

Clause 10 provides the Secretary of State with power to make regulations placing an obligation on both employers and those claiming to be entitled to Statutory Paternity or Adoption Pay to supply information to the Inland Revenue.

Subsection (1) of this clause gives the Secretary of State power to make regulations enabling officers of the Board of Inland Revenue to obtain information and documents. The request must be for information that is reasonably required and must also be for information necessary to decide whether Statutory Paternity or Adoption Pay is, or has been, payable. The regulations will set out a time period within which information sought under the regulations must be provided.

The regulations made under subsection (1) will specify the persons who may be required to provide information and documents as the following:

• the person claiming to be entitled to Statutory Paternity or Adoption Pay;
• their partner or spouse;
• employers;
• labour supply and employment agencies;
• the servants and agents of any of the above.

Regulations similar to those which will be made under this clause can be found in the Social Security (Claims & Payments) Regulations SI 19871968 (as amended). Inter alia these regulations currently apply to information and documents sought in respect of Working Families Tax Credit cases.

Regulations under clause 10 are in addition to the regulations made under clause 8 requiring employers to produce records for inspection. Regulations under this clause are made with the concurrence of the Board of Inland Revenue and are subject to the negative procedure.

Clauses 18 to 21 contain improvements to Statutory Maternity Pay (SMP), administered and paid by employers to qualifying employees.

The changes contained in these four clauses will result in consequential amendments to existing regulations. In summary, the clauses increase the standard rate of SMP, extend the payment period, increase the period of notice a woman must give her employer, safeguard an employee's entitlement to SMP at the 15th week before the expected week of confinement and enable employers to recover SMP in advance where appropriate and from all payments due to the Inland Revenue,

In particular:

Clause 18 amends an existing regulation making power in section 165(1) of the Social Security Contributions and Benefits Act 1992 which allows the duration of the Maternity Pay Period (and through section 35(2) the Maternity Allowance Period) to be set out in regulations subject to a maximum period. The maximum period that may be prescribed is increased from 18 to 26 weeks. It is intended to amend regulations to increase the Maternity Pay Period (and thus also the Maternity Allowance Period) from 18 to 26 weeks.

Clause 19 amends section 166, which sets out the SMP rates of payment. As now the section contains a power to prescribe a weekly rate of SMP. This will be used to prescribe in regulations that the weekly rate of Statutory Maternity Pay will be increased to £100.

Clause 20 amends the entitlement and notice provisions of section 164. Section 164(2(a) is amended to safeguard a woman's entitlement to SMP once she has reached and been employed in the 15th week before her expected week of confinement (EWC) regardless of whether she subsequently leaves that employment.. Section 164(4) is amended to increase the period of notice a woman is required to give her employer from 21 to 28 days. Both of these provisions are currently modified by regulations in specific circumstances. The entitlement condition requiring employment into the 15th week before the EWC is modified should the woman give birth before that week. The notice provision in section 164(4) is similarly modified in cases of a birth which takes place either before she has given notice or after she has given notice but before her payment period has started. In addition a woman is not required to give notice if she leaves her employment after the start of the 15th week where she has been dismissed or her employment is otherwise terminated. It is intended to amend existing regulations to reflect the increased period of notice given by new section 164(4) and so that a woman will not be required to give notice if she leaves her employment for any reason after the start of the 15th week. The existing regulation making powers in section 164(4) and 164(9) are amended so that powers to modify the provisions of section 164 as redrafted fall into section 164(9).

Clause 21 substitutes into the Social Security Contributions and Benefits Act 1992 a new section 167 which provides for employers to recover most or all of the SMP they pay out and the method of such recovery. Subsection 2 of the clause substitutes the new section 163 of the corresponding Northern Ireland provision in the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

The new section largely re-orders the existing provision but contains additional powers under subsection (5) of new section 167 to make provision in regulations for funding in advance as well as in arrears, to prescribe which payments that an employer is due to make to the Inland Revenue may be recovered and to allow the Inland Revenue to recover any sums overpaid from such employers.

It is intended that existing regulations will be amended to:

(a)  allow employers to deduct SMP payments from any tax, national insurance or student loan payments they are due to make to the Inland Revenue and not just national insurance contributions payments as now;

(b)  to enable an employer, where his SMP payments exceed such sums due to the Inland Revenue, to apply for payment in advance of making the SMP payments to the woman and not, as now, only in arrears; and

(c)  to enable the Inland Revenue to recover any sums subsequently found to be overpaid to the employer.

PART 2

The powers connected with tribunal procedures will be implemented through revisions to the existing Employment Tribunals (Constitution and Rules of Procedure) Regulations 2001 and the equivalent for Scotland. These regulations are subject to the negative resolution procedure. The work of the Employment Tribunals Systems Taskforce may cover the operational aspects of the new powers, and help inform the drafting of these revisions. The Taskforce may also recommend some changes to the regulations independently of the Bill. It is due to report in Spring 2002, making recommendations on how services can be made more efficient and cost effective for users against a background of rising caseloads. The Department proposes to delay drafting of the revised regulations until the Taskforce has reported . There will be full public consultation on draft regulations. The following clauses of the Bill will be implemented through the tribunal regulations:

Clause 22 confers new powers on the Secretary of State to make regulations:

(a)  authorising the tribunal to order that a representative may not recover his fees from his client by reason of the representative's conduct of the case;

(b)  authorising a tribunal to order a representative to meet the costs incurred by any party, on account of the way the representative has conducted the case;

(c)  authorising a tribunal to order that a representative meet all or part of any allowances which the Employment Tribunal Service pays out to parties in connection with attendance at the hearing, again on account of the representative's conduct of the case; and

(d)  authorising the tribunal to order that one party make a payment to the other in respect of time spent preparing the case. Although this will assist unrepresented parties in particular, since litigants in person are not able to recover their costs, it will also aid parties who are represented. In line with present regulations for costs awards, the regulations in respect of compensation for preparation time will specify that such awards may only be made where a party, or a party's representative, has acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of a case has been misconceived. The regulations will set out guidelines for the tribunal on assessing preparation time awards. The detail of how best to assess them will be considered during the consultation on the regulations, but it is not intended that the parties should have to provide evidence of the amount of time they have spent on the case.

Clause 23 will be implemented through revisions to the existing Employment Appeal Tribunal Regulations, which are the responsibility of the Lord Chancellor. These regulations are subject to the negative resolution procedure. The clause replaces section 34 of the Employment Tribunals Act 1996 with a new section. Currently, this section confers a power on the Lord Chancellor to make procedure rules empowering the EAT to order costs or expenses where proceedings are unnecessary, improper or vexatious, or there has been unreasonable delay or unreasonable conduct in bringing or conducting proceedings (this power has been exercised in rule 34 of the Employment Appeal Tribunal Rules 1993/2854, as amended). The new section contains a general power for the Lord Chancellor to make rules on costs and expenses in the EAT. It also mirrors the new powers for employment tribunal procedure regulations to authorise disallowing representatives' costs and the making of wasted costs orders against representatives (with the exception of allowances, which are not provided in the EAT). It also makes it explicit that the rules may include provision for taxing or otherwise settling awards of costs or expenses. The circumstances in which costs can be awarded will be set out in the rules. There will be no significant changes to the way in which the costs regime operates at present. There will be full consultation on the rules.

The replacement of section 34 with provision to make procedure rules on costs and expenses allows all the costs rules for the EAT to be laid out in one set of regulations. It will enable the EAT costs regime to develop consistently with the ET costs rules, where this is appropriate, and provide for greater flexibility in implementing the new provisions on wasted costs on which there will be further consultation. This flexibility has been welcomed by the EAT.

There is no power to make rules in respect of preparation time because EAT cases deal largely with points of law, and as such require less preparation by the parties in terms of gathering and preparing factual evidence. In addition, most parties have legal representation, and litigants in person may recover their costs.

Clause 25 provides a power for the regulations to delegate to the Secretary of State the power to prescribe outside of the regulations all or part of the forms which must be used for instituting or defending employment tribunal proceedings, and any documents which must be supplied with such forms. The Secretary of State would be able to make such provision in the regulations themselves on the basis of existing powers. However, in order to have the flexibility to make changes quickly, and to make minor changes to the wording and layout of the forms which would not necessarily justify the making of a statutory instrument, but which would make the forms more user-friendly, it is considered helpful for the Secretary of State to have this power to prescribe forms under the regulations. The regulations will make provision about publication of any requirements prescribed by the Secretary of State in this way, in order to ensure that the forms are readily available to those likely to need them.

Clause 26 replaces existing subsection 7(3A) Employment Tribunals Act 1996. That subsection currently provides that employment tribunal procedure regulations may authorise the determination of proceedings without a hearing where the parties have given their consent, whether or not they have subsequently withdrawn it. The replacement subsection will allow such determinations in the circumstances prescribed by regulations. There are two main reasons for altering the subsection in this way. Firstly, it may be appropriate in some cases to allow the parties to withdraw consent to a determination without a hearing. Secondly, the clause will allow the more detailed circumstances in which a determination without a hearing may go ahead to be set out in the regulations. These circumstances are intended to be: where the parties have given their written consent to waive their right to an oral, public hearing, following the receipt of independent advice on the implications of doing so (unless the case is uncontested, in which case the respondent's consent will not be required) and where the tribunal agrees that no hearing is necessary, for example where it is satisfied that it does not need to hear the parties and that the public interest does not require a public hearing to be held.

Clauses 27 and 28 amend the Employment Tribunals Act 1996 to enable employment tribunal procedure regulations to make certain provisions in relation to practice directions and pre-hearing reviews. The regulations are subject to the negative resolution procedure.

PART 3

In Part 3 there are powers connected with the amendment of the statutory procedures (Clause 29) and the incorporation of the statutory procedures into employment contracts as an implied term (Clause 30). The statutory procedures are defined at some length in Schedule 2, and the power in Clause 29 permits the Secretary of State to change the Schedule by an affirmative resolution order following consultation with ACAS. The regulation-making power at Clause 30 will be used to define the application of the statutory procedures as an implied contractual right. Regulations under Clause 30 are subject to the affirmative resolution procedure.

Clause 31 has been discussed above, in Section 1.

Clause 32 provides a power for the Secretary of State to make affirmative regulations about the time limit for beginning proceedings in respect of a claim concerning a matter to which a statutory procedure applies. Amongst other things the regulations will provide for the normal time limits to be extended to allow the statutory procedures to be used while not unduly prolonging proceedings. In particular, where a claim has been lodged within the normal limit of three months but the statutory procedures have not been commenced or have been commenced but not completed the time limit will be extended by a further three months from the expiration of the original time limit.

The Government deleted the existing clause 33 (non-completion of statutory procedure: exclusion of claims) at Committee, and replaced it with a new and more detailed clause, thus considerably reducing the breadth of the regulation-making powers regarding the admissibility of claims to tribunals. The original clause conferred a power on the Secretary of State to make regulations preventing certain claims from being made to an employment tribunal until certain conditions to be specified in the Regulations had been met. This clause has been replaced by a much more detailed clause which sets out on the face of the Bill how the admissibility policy will apply and what the conditions are to be. There are still some regulation-making powers contained in the clause. They cover exemptions (subclause (5)), the way the statutory procedures in schedule 2 are to apply (subclause (6)), amendments or repeals of parts of the clause or schedule (subclauses (8)(a) and (b)), the definition of employee and employer for the purpose of this clause (subclause (8)(c)). The power in subclause (8)(a) can only be used after consultation with ACAS.

All the dispute resolution regulations will be subject to full public consultation.

PART 4

Part 4 consists of miscellaneous and general provisions. In addition to the clauses on fixed-term work, flexible working and work-focused interviews for partners, dealt with in detail in section 1 of this Memorandum, there are a number of other clauses in this part with regulation-making powers.

Clause 42 introduces a questionnaire procedure into the Equal Pay Act, similar to that which exists in the other discrimination acts. The questionnaire procedure will include: prescribed forms; questions and answers as case evidence; a time period for serving questions and for a response by the employer; and the manner in which these questions and answers can be served. The clause inserts a new section 7B into the Equal Pay Act.

Subsection 7B(2) provides the Secretary of State with the power to prescribe, by order, a questionnaire that individuals can use to request information from their employers. Employers will not be obliged to respond but, if equal pay proceedings are commenced, the Employment Tribunal will be able to draw inferences from a deliberate failure to respond or an equivocal or evasive reply. A questionnaire and any reply from the employer will be admissible as evidence in tribunal proceedings. Subsection 7B(7) provides the Secretary of State with the power to prescribe, by order, a time period within which employers must respond to the questions served.

The questionnaire and accompanying guidance are currently being designed, and it is planned to consult on these once the Bill has received Royal Assent. The Order, which is subject to the negative procedure, will be laid before the end of 2002, and is expected to come into force early in 2003.

Clause 43 establishes a statutory right to time off for union learning representatives (ULRs). The clause inserts a new section into the Trade Union and Labour Relations (Consolidation) Act 1992. The bulk of the provisions are in the primary legislation but there are a number of regulation-making powers in the clause.

Clause 46 contains powers connected with fixed term work in Northern Ireland. This clause introduces a power enabling the Department for Employment and Learning in Northern Ireland to make regulations preventing less favourable treatment of fixed term employees and preventing abuse arising from the use of successive periods of fixed term employment. As such, it is very similar to clause 45 on fixed term work (England and Wales and Scotland). This power is taken at the request of the Minister for Employment and Learning in Northern Ireland, and with the agreement of the NI Executive. Although employment law is a transferred matter under the Northern Ireland Act 1998, an enabling clause could not be included in a corresponding Northern Ireland Assembly Bill, as Fixed Term Work Regulations are required to be made in Northern Ireland by July 2002, which leaves insufficient time for the passage of a Northern Ireland Employment Bill with its own enabling clause. The regulations are to be made by the affirmative procedure.

Clause 47 amends section 35A of the Social Security Contributions and Benefits Act 1992, which sets out the weekly rate of Maternity Allowance. The weekly rate is directly linked to that prescribed for Statutory Maternity Pay under section 166 (see Clause 19 in Part 1). The weekly rate payable is dependant on the level of the woman's average weekly earnings determined under regulations made under existing section 35A(4). For the self-employed regulations under section 35A(4)(b) and (5)(c)(i) currently treat a woman who has paid a Class 2 national insurance contribution in respect of a week as having earnings equal to the lower earnings limit in force at the end of that week. This is to ensure that such a woman will receive the standard rate of MA. Clause 46(1)(b) amends section 35A(5)(c)(i) to achieve the same result from 2003. It is intended that the existing regulations will be altered to ensure that a self-employed woman who has paid a Class 2 contributions will be deemed to have earnings at a level which will result in the payment of the standard rate of MA of £100 a week.

Schedule 7

This schedule makes minor and consequential amendments and in particular paragraphs 4 and 5 amends sections 35 and 35A of the Social Security Contributions and Benefits Act 1992 which deal with Maternity Allowance. The paragraph re-orders existing provisions and in particular relocates a power to specify the Maternity Allowance Threshold (the minimum level of earnings needed to qualify for MA) by order.

25 February 2002

3   Work and Parents: Competitiveness and Choice, a framework for simplification, available at http://www.dti.gov.uk/review.htm
Work and Parents: Competitiveness and Choice, a framework for paternity leave, available at http://www.dti.gov.uk/review.htm
Work and Parents: Competitiveness and Choice, a framework for adoption leave, available at http://www.dti.gov.uk/review.htm Back

4   About Time: Flexible Working, Report of the Work and Parents Taskforce - published November 2001 (available at http://www.workandparentstaskforce.gov.uk/news.htm).  Back

5   Work and Parent, the Government response to the flexible working taskforce - published November 2001 (available at http://www.dti.gov.uk/er/review.htm).

 Back