Growth and Infrastructure Bill
Debate between Viscount Younger of Leckie and Baroness Brinton
Viscount Younger of Leckie
If I may, I am about to address some points that my noble friend made concerning the tax status.
For example, we do not want directors to manipulate the new status by making fake jobs for family members, which may have been in the mind of my noble friend Lord Forsyth when he made his earlier comments. We want this employment status to be attractive to a whole range of people. If we allow that no income tax or national insurance contributions are payable on the first £25,000 of shares, we think this will create only a disproportionate tax benefit for higher earners. This is about a new employment status that is open and attractive to a range of prospective users.
My noble friend Lord Forsyth asked a number of questions relating to how different types of shares would be treated and what this meant in tax terms for individuals in employment. When a person agrees to become an employee shareholder, the employer should be able to tell them what type of shares they will receive. The types of shares an employee shareholder receives may vary, as I think my noble friend indicated. First, they could be non-restricted shares. These are shares awarded without any ongoing conditions, limitations or requirements that affect their market value. If an employee shareholder holds non-restricted shares, they are usually in the same position as an external investor in the company.
Secondly, restricted shares are shares awarded with conditions, limitations or requirements attached that reduce their value. For example, an employee shareholder may not be able to sell their shares for a certain period or, if they leave the company, they may not be able to retain their shares. The employer may agree to buy the shares back from the employee shareholder.
Thirdly, forfeitable shares are restricted shares awarded on the basis that within a certain period of time, or on the occurrence of certain events, the employee shareholder may have to forfeit them and in return will receive less than their market value. When the tax is payable on these shares will depend on the type of shares that are offered. As my noble friend Lord Stewartby said, this is a voluntary arrangement, under which the individual will go into an agreement with the employer, and the type and status of the shares will be decided with their agreement. That will then lead, by agreement, to the point when the tax will be payable.
Baroness Brinton
Does the Minister accept that the flexibility for employees to negotiate the terms of any restrictions in shares will itself be restricted if a number of employees are being offered shares, because the capacity within the company to vary terms will be extremely difficult? In practice, the employee will have no flexibility at all to negotiate.
Viscount Younger of Leckie
My noble friend is taking rather a negative view. We need to look at the opportunities that the whole scheme offers. The employee shareholder could decide not to accept any shares or such a role if the situation that my noble friend mentioned applied. It may not suit them; they need to get advice and go into this scheme with their eyes open.
Baroness Brinton
The guidance notes that we saw were quite explicit that the prospective employee shareholder applicant should be treated exactly the same as any other applicant, with the one exception of their financial resources being such that they could not pay the tax bill right at the start. If that is the case, the argument made by the noble Lord, Lord Pannick, myself and others is that, first, that penalises those who are concerned about losing their rights. Secondly—and this is the core question—is it voluntary? The Minister has emphasised right the way through the debates on the Bill that the scheme is utterly voluntary.
Viscount Younger of Leckie
It is indeed voluntary, but I would like to clarify that when it comes to a jobseeker seeking a job, they are treated in exactly the same way as other statuses. That is because we believe it is important to move jobseekers into work as quickly as possible, just like other statuses. Periods of unemployment, as we know, can have a most damaging effect on individuals’ long-term employment prospects and indeed earnings. That is why the jobseeker allowance regime focuses on moving claimants into any work as quickly as possible. This remains the case for the employee shareholder should they be mandated and reach the point when they are offered this particular position. We think it is right that they should not be treated any differently in this particular respect.
Enterprise and Regulatory Reform Bill
Debate between Viscount Younger of Leckie and Baroness Brinton
Baroness Brinton
My Lords, I, too, oppose these two amendments and support the points that the noble Lord, Lord Howarth of Newport, has made, to which I briefly add two further points.
The rights holders of apparently orphan works very rarely come forward at a later date. This makes court action unlikely in most cases, particularly where use of the works was manifestly for the purposes of teaching or research. However, using works in these ways would require institutions such as universities and libraries to operate outside the law in order to make legitimate use of this material. This is not a satisfactory long-term solution.
It is important that what constitutes a diligent search is sensitive to the intended use and the kind of material. Searching for the author of a commercially published book, where the intention is to republish for commercial gain, should require a higher level of diligence than for the digitisation for preservation purposes of an archive of non-commercial material. It is very important that the Bill is flexible enough to allow regulations to account for these differences. Unfortunately, these two amendments would take it in the opposite direction.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)
My Lords, I begin by thanking my noble friends for their amendments. They raise important issues.
Turning first to Amendment 84AE, in Grand Committee there was a full and productive debate, as has been mentioned, on the issues around diligent search. I have also subsequently written to the noble Lords who spoke in that debate. I can confirm that, before a work qualifies as an orphan, a diligent search for the all the rights holders in the work must be undertaken. If as a result of an initial UK search there are indications that the rights holders may be overseas, there will be a requirement to expand the diligent search to include relevant overseas territories. However, a balance must be struck between protecting rights holders and making the system cost-effective for users. That is why the orphan works working group is undertaking detailed work to ensure that diligent search requirements reflect current best practice across all sectors. These requirements will be set out in regulations that will be subject to both consultation and the affirmative procedure.
I will answer some questions raised by my noble friend Lord Clement-Jones and the noble Lord, Lord Howarth, about the provision of more detail on the requirements for diligent search, although I am not sure how far I can reassure the noble Lord, Lord Howarth. Diligent search should find rights holders when works are not really orphaned, and it is important to find the right balance between protecting rights holders and making the system cost-effective. Extensive thought has already been given to what should be done in a diligent search for different sectors, including by the European digital libraries initiative. Existing industry databases and registries and bibliographic publications are just a couple of examples of sources of information that could be searched. It is likely that searches would differ across the various sectors, and therefore sector-specific guidance may need to be developed. To that extent, this may help to answer some of the concerns of the noble Lord, Lord Howarth.
Diligent search is being considered with stakeholders through the orphan works and ECL working group. Diligent search guidance will cover the scenario where the work may have originated outside the UK. The noble Lord, Lord Howarth, may know that the Canadian orphan work scheme licenses works, provided that they have a strong connection with Canada. They may be of foreign origin, but with an orphan work this will not necessarily be known.
In relation to Amendment 84AE, my noble friend Lord Clement-Jones was concerned that there might be a loophole regarding sublicensing. The answer to this is that the Bill does not permit sublicensing, if that is a help to my noble friend.
I may well have touched on this earlier, but for clarity, the noble Lord, Lord Howarth, again raised the issue of diligent search and made a fair point about the need to cover every orphan. I believe that he used the analogy of the postcard. I do not think that we can avoid the need to look for a legal owner, but we do not want a search regime that is too obtrusive and costly. This is a matter of achieving balance, and that is why these matters are best dealt with in regulations, where the needs in different sectors can be properly addressed.
Amendment 84AEA would remove the option of licensing a work under the orphan works scheme where it was not known whether copyright subsists. Establishing whether a work is still in copyright will of course be a key part of the diligent search process. Indeed, it is in the applicant’s interest to establish this fact, because if the work is out of copyright they will be free to use it and will not need to apply for an orphan works licence. However, it may not always be possible to establish definitively whether a work is still in copyright. This will particularly be the case with unpublished works, where often key information such as the date of creation or the date of the creator’s death is not known. Having to establish definitively whether a work is still in copyright could, therefore, exclude very many works.
This practice of allowing a licence where there is uncertainty about whether copyright subsists is followed in Canada, which I mentioned earlier, where a scheme has been running for nearly 25 years. In doing so, it provides legal certainty for the user of the work. If we do not include such works within the scope of the orphan works scheme, we could exacerbate the very problem that the proposals are designed to address. I hope that in the light of the assurances that I have provided, my noble friend will not press his amendment.
Enterprise and Regulatory Reform Bill
Debate between Viscount Younger of Leckie and Baroness Brinton
Baroness Brinton
My Lords, I shall speak against Amendment 84AA and the other amendments in the group. I refer back to the point made by my noble friend Lord Clement-Jones about the scope and size of the problem of unpublished works and grey literature. A study by the British Library found that 43% of potentially in-copyright works published between 1870 and 2010 were orphan works. The figure for unpublished works, including letters, diaries, photographs and memos is far higher, and grey literature produced by charities, societies and associations but not for any direct commercial purpose, also contain high concentrations of orphan works. One example of that is a study of sound recordings of political debates in the 1960s, which identified 350 performers, of whom only 100 could be traced, meaning that more than 70% of the content was orphaned; 350 hours were spent trying to clear the rights to use the material; and the success rate—permissions received—was only 4%. That shows us the size of the problem, which is why I am grateful to the Government for the clarifications in the Bill and why we need to oppose the amendments.
Bringing copyright for unpublished work into line with the existing copyright duration would release much valuable historical data into the public domain and would not affect unpublished works created shortly before the 1988 transitional arrangements. As we have discussed in previous stages of this Bill, works of these kinds are, of their nature, orphan works. The copyright holders are incredibly difficult to identify. The British Library notes that it still has material from the 7th century in copyright. As a result, a large amount of material currently in copyright due to the transitional arrangements would be difficult or impossible ever to obtain a licence for.
Viscount Younger of Leckie
My Lords, I turn first to Amendments 84AA, 84AB and 84AC and thank my noble friends for raising the important issues in them. At the outset, I will answer questions raised by my noble friend Lord Clement-Jones, supported by my noble friend Lady Brinton, about the voices concerned about the evidence for the clause and for the orphan works, and especially asking how much is pre-20th century. That is probably a slight paraphrase of the questions raised by my noble friend Lady Brinton.
We do not know the exact amount, but the National Archives estimates that around 12 million—or 42%—of the 30 million archival items held in English and Welsh public archives predate 1891, which is over 120 years ago. Therefore we are now likely to be 70 or more years past the date of creation. The vast majority of these are thought to be unpublished and would therefore remain in copyright under the current law until 2039. The law relating to the transitional provisions of the Copyright, Designs and Patents Act 1988 is complex. The various points that have been raised through these amendments and in debate underline that complexity. These are important points, and it is right that we should take time to debate them properly.
The Government’s overriding policy objective has always been to enable use of historically important unpublished material which has over-long copyright protection. Prior to 1998, copyright on such material was perpetual, and from 1998 it ran until 2039 at the earliest. Because of the way the 1956 and the 1988 copyright legislation interact, it appears that it may be possible for a film to remain unpublished, even if it has been commercially exploited by showing it to the public in a cinema or on television. This is because it can be shown to the public by various legal routes which do not technically constitute publication; for example, public performance, exhibition or communication to the public.
To become published, a film would need copies of it to be issued to the public, such as on DVD or through online sales. It may be necessary to recognise this in the treatment of films in the regulations. Before they exercise this power, the Government recognise that it will be important for the impact assessment accompanying the regulations to assess whether there are costs to specific rights holders or industry sectors. The regulations would allow the Government to treat different works in different ways.
However, my noble friend has raised a good point about the impact on commercial film and photographic archives. My noble friend Lord Clement-Jones today raised concerns about business expectations in relation to unpublished works. I will therefore commit to looking in advance of Third Reading at how this should be addressed. I hope that in the light of this assurance, my noble friend will not press this particular amendment.
Finally, Amendment 84AD relates partly to the provisions to reduce over-long copyright in some unpublished works—which we spoke about earlier—and partly to the orphan works licensing scheme. I can confirm that where there is any doubt about whether an unpublished, anonymous or pseudonymous orphan work is still within copyright, an orphan works licence could be applied for. This would be under the scheme proposed in Clause 69. Therefore I believe that there is no need for this amendment.
If the user of an orphan work chose to proceed without gaining an orphan works licence, they would be open to possible legal action if a rights holder reappeared and the work turned out to be still within copyright. That might be described as a risk-based approach to the problem of copyright infringement. However, the courts would be likely to take a dim view of such infringement when there was a lawful means of using such a work through the orphan works licensing scheme. In the light of the assurances that I have provided, I hope that my noble friends will not press their amendments.
Enterprise and Regulatory Reform Bill
Debate between Viscount Younger of Leckie and Baroness Brinton(11 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text
Viscount Younger of Leckie
I thank the noble Baroness, Lady Turner, supported by my noble friend Lady Brinton, for setting out some of her concerns about this clause. I have certainly listened very carefully to the noble Baroness, Lady Turner, who spoke so eloquently.
The Government have also listened to noble Lords’ concerns about the Lord Chancellor’s order-making powers. I have already spoken about the amendments that we have brought forward to address the points that noble Lords made in Grand Committee. In answer to the question raised by my noble friend Lady Brinton, we have no plans to steer the Lord Chancellor on the necessity to have a panel and to prescribe proceedings as such. However, we are working on that important point that she made and on the diversity point, which I also want to pick up on.
I should also make the point that there is no evidence to suggest that judges sitting alone—this is implicit in the noble Baroness’s question—will have a negative impact on the determination of discrimination appeals, which can be brought only on a point of law. This might address the question that was raised by the noble Lord, Lord Young. The Equality Act also covers a range of sectors, including service provision, property rights and education. Only one of these, work, is dealt with in the employment tribunal system. The remaining equality sectors are dealt with in the civil courts where judges sit, and have always sat, alone.
I hope that I have been able to reassure the noble Baroness, Lady Turner, to some extent—I am not sure that I have—and other noble Lords that this measure, which is a proposal that was supported by 60% of those responding to the Resolving Workplace Disputes consultation, is not intended to undermine the value that lay members bring to the tribunal system as a whole. Nor will it have the adverse consequences that they fear.
Baroness Brinton
My Lords, I wonder whether the noble Viscount might write to those who have spoken in this debate to give us some inkling of where a judge would be expected not to sit on their own. I am struggling to see where the dividing line is. I apologise for raising this again, as I raised it in Committee. It just feels too far in the future to be able to be confident on the issue.
Viscount Younger of Leckie
My Lords, I shall speak also to Amendments 25 to 28. I turn to these amendments as the provision for the employment tribunals to impose financial penalties on employers. This is a response to points raised in Grand Committee. Much of the debate on this clause related to amendments tabled by noble Lords opposite in Grand Committee, which were intended to probe the practical application of the new regime, including the reasons for setting the level of penalty at 50% of the value of the award, and to seek that failure to follow grievance or disciplinary procedures be prescribed as an aggravating feature for the purpose of attracting a penalty. Further amendments sought to address concerns, which we share, about the non-payment of tribunal awards.
As my noble friend Lord Marland explained at the time, the decision to make the penalty 50% of the value of the award was informed by the national minimum wage penalty regime introduced by the previous Government, where the level of the penalty is also set at 50%. While we sympathise with the intent behind the amendment to specify that a failure to follow grievance and disciplinary procedures should constitute an aggravating feature, the Government are clear that it should be for the tribunal to determine what constitutes aggravating features, based on the facts of the case before it.
We are at one, however, with the desire to improve the position on the non-payment of tribunal awards. Proposals put forward by noble Lords opposite in Committee attempted to use the financial penalty regime to address non-payment. While the intent was clear, the effect would have been limited, in that penalties would be imposed in fewer cases than those in which awards go unpaid. While non-payment is not a matter for this Bill, I can reassure noble Lords that we are taking action to address this through research into the root causes of the problem and changes to employment tribunal process.
These government amendments are a further area where we share a common view. The noble Baroness, Lady Hayter, set out in Grand Committee her concerns about the unintended consequences that might arise in the event that a financial penalty was imposed on an insolvent business. She argued that for companies in insolvency the objective of the financial penalty regime, which is to encourage employers to have greater regard to their employment obligations, was not relevant and that there was a risk, without a specific exemption, that the tribunal may choose to levy a penalty. If that were the case, the Exchequer would then have a claim on the assets of the company, leaving less available for distribution to other creditors. The potential liability might also threaten a company rescue, as the penalty may rank as an expense of an administration.
As we have made clear, the Government do not want to fetter judicial discretion in the exercise of this power by tribunals. We agree with the noble Baroness that there may be no merit in imposing a penalty where the respondent is insolvent, but we do not believe that it is necessary to carve out an exemption in statute. Instead, Amendment 24 inserts a provision in the clause to require tribunals to have regard to the ability of the respondent to pay when deciding whether a penalty is appropriate.
Such a power, which already exists with regard to cost and deposit orders, will allow the tribunal to have regard to the circumstances of the business and the wider impacts of a decision to impose a penalty. It will also apply more widely than to just insolvent companies and so could be relevant to those on the brink of insolvency, for which the imposition of a penalty might well be the final straw.
My noble friend Lady Brinton also raised concerns in Grand Committee about the effect of the £100 floor where there is a multiple claim against a large employer, particularly in the event that the employer goes bust. We agree that there are real concerns here which the previous amendment does not wholly address in so far as it does not provide the flexibility for tribunals to impose any penalty when, in fact, one may be both appropriate and affordable. Amendment 25 therefore effectively removes the floor of £100 in respect of multiple cases only, and tribunals will be able to use their discretion both as to whether a penalty is appropriate and as to the level of that penalty, subject, of course, to the upper limit of £5,000. So, if a group of 400 employees brought a multiple equal pay claim against their employer and the tribunal found that there had been a breach, with aggravating features, the tribunal could decide impose a financial penalty. The change we are making through this amendment will mean that instead of the requirement to impose, in those circumstances, a penalty of at least £40,000, based on the original provision that set a minimum of £100 per claimant, the tribunal will have discretion to determine what level of penalty is appropriate. The upper limit of £5,000 per claimant will continue to apply.
Amendments 26, 27 and 28 make drafting and consequential changes to the clause, but they do not alter its effect. The principles of a minimum and maximum amount of financial penalty continue to apply, with penalties levied at 50% of the value of the award in single claims and up to 50% of the value of each award in multiple claims. I believe these amendments constitute a real improvement to the drafting and effect of the clause, and I beg to move Amendment 24.
Baroness Brinton
My Lords, I rise briefly to thank the noble Viscount for the amendments that he has laid before the House today. I think they go a considerable way to allaying the concerns and fears I had.
Growth and Infrastructure Bill
Debate between Viscount Younger of Leckie and Baroness Brinton(11 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text
Viscount Younger of Leckie
I thank my noble friend for that question. The shares are treated as taxable income, although they are shares, so there would be tax at whatever level payable on the shares received.
I should now like to answer some questions that have arisen. The noble Lord, Lord Pannick, stated that there was no demand for this new status. I can understand his concern from other comments made this afternoon. This new employment status will not be appropriate for all companies or be taken up across the board. It simply adds to the options and flexibility available to companies and individuals in determining their employment relationships.
My noble friend Lord Flight has eloquently mentioned this particular issue in his speech. The new status will probably appeal mainly to fast-growing and small start-up companies and individuals as this is the level where employment rights are seen to impact the most.
I would like to address directly the points raised by my noble friend Lady Brinton to say clearly that this particular employment shareholder status will not suit the examples that she cited in or near the Cambridge area. My noble friend Lord Strasburger also cited some example and I suspect it would not suit—
Baroness Brinton
Does my noble friend accept that this is exactly the group of companies that Ministers in another place were citing were perfect for exactly this sort of scheme?
Viscount Younger of Leckie
Indeed, it may well be the case, but it is not my position to stipulate exactly which particular companies would be right for this particular scheme; only to say that we are offering this as an incentive and an opportunity for business to help the company grow. If it is not suitable for particular companies, that is absolutely fine—it is not suitable.
My noble friend Lady Brinton also asked why we were removing the statutory right to request time to train. The Government recognise that training in the workplace is important and acknowledge the concerns raised. There is currently no reason to suggest that removal of the statutory right to request time to train, which at present is available only to employees of large organisations—that is, those with more than 250 people—would result in employee shareholders being unable to access training or request it if needed. Larger employers tend to have established appraisal and development processes. On that basis, we do not believe that this proposal will adversely affect future employee shareholders. Employee shareholders can still make non-statutory requests for time off to train.
Baroness Brinton
My Lords, I apologise for intervening again but this point is absolutely critical to the Government’s intended success of the clause, or otherwise—that is, a carrot needs to be available to the employee at the time of the share issue, as well as later when there might be some fruition in terms of the investment. This seems to remove the only carrot at the time of the initial employment.
Viscount Younger of Leckie
As promised, I will revert to the noble Lord, Lord Adonis, as quickly as possible to confirm what I said.
Baroness Brinton
Does the Minister accept that even if the Government say that it is likely that very few companies will be offering this type of employee share ownership, having a couple of points of guidance buried in 3,000 pages, or even 300, would mean that the average member of staff at a Jobcentre Plus would probably be unlikely to find the relevant information straight away? Does this not argue for the need to put this very special interest in the Bill?
Viscount Younger of Leckie
I would like to pick up only one of the points made by my noble friend. It is important, and I am sure that the officials are working hard on this, to ensure that the guidance that is offered is simple, and that there is a way that those involved who need to go to the guidance can do so quickly and effectively, despite the fact that it is 3,000 pages long.
Viscount Younger of Leckie
I just want to re-emphasise what I was trying to say about the document being 3,000 words long. I wanted to reiterate that this is no small task. One may well say, “You should’ve done it before Committee stage today and certainly before Report”, but as the noble Lord knows, I cannot at the moment give a guarantee that it will be ready by Report. I simply wanted to state that this is a major document, a lot of detailed work is going on, and it will come.
Baroness Brinton
My Lords, I apologise for intervening on an intervention, but I just wanted clarification on this. The noble Viscount just said that the document was 3,000 words long, but I understood that we had been told earlier that it was 3,000 pages. There is some difference.
Baroness Brinton
Clause 27 requires employees to give up a range of rights. Many of these rights are ones that the Beecroft report recommended should be removed from employees more generally. The Secretary of State, Vince Cable, hit out at Beecroft’s unfair proposals. He said:
“One of Mr Beecroft’s recommendations was a suggestion to bring in no-fault dismissal. In my daily conversations with businesses, this has very rarely been raised with me as a barrier to growth. Businesses are much more concerned about access to finance or weak demand than they are about this issue”.
Given that the clause is in the Growth and Infrastructure Bill and that the Secretary of State does not believe that giving up the right to claim unfair dismissal is a barrier to growth, why should we ask workers to give it up under this new status? In fact, Mr Cable went even further and stated that it would be counterproductive. He said:
“At a time when workers are proving to be flexible in difficult economic conditions it would almost certainly be counterproductive to increase fear of dismissal”.
I never thought that I would support Mr Beecroft, but he recommended a compensated no-fault dismissal. The Government are going one step further and do not even provide compensation for no-fault dismissal under the employee shareholder status. Given how controversial Mr Beecroft’s proposals were in the first place, and the Secretary of State’s protest, does this not give us further reason for the removal of subsections (2)(c) and (d)? Beecroft also recommended the removal of the right to request flexible working—another of his recommendations that the Government are trying, perhaps, to sneak in by the back door through this status for certain employees. However, I have to say that this directly contradicts the coalition agreement and the mid-term review, which states that the Government will extend,
“the right to flexible working to all employees”.
How can the Government fulfil that pledge when they will be removing the right from employee shareholders?
Viscount Younger of Leckie
My Lords, Clause 27 is about providing further choice to the range of employment statuses that employers can consider and choose. I want to take this opportunity to explain to the House the difference between “employee shareholder”, “employee” and “worker”. This will help us understand the context of the noble Lords’ amendments.
People and companies already have a choice in how they wish to work and how they structure their workforce. The choice is usually between hiring someone as a worker, an employee or on a self-employed basis. The difference between these employment statuses is the level of obligation and mutuality to provide and carry out work, and the rights associated with the statuses. I hope that the following explanation goes a little way to answering some questions that my noble friend Lord Deben raised.
Workers have limited rights such as the right to be paid the national minimum wage, protections against unlawful deductions from their pay, paid annual leave and rest breaks, and protection against discrimination, which includes on the ground that they work part time. Employees who meet the relevant conditions have the following additional rights: a general right not to be unfairly dismissed after two years working with the same employer; automatically unfair dismissal rights; statutory redundancy pay; statutory minimum notice period; statutory collective redundancy notice period; TUPE, which was mentioned earlier by the noble Baroness, Lady Turner; the statutory right to request flexible working; and, finally, if they work in a large business of more than 250 employees, they have the statutory right to request training.
The self-employed have limited employment rights linked to discrimination and health and safety. The new employee shareholders will have more rights than someone taken on as a worker, but not all those of an employee. They will not have: first, the right to unfair dismissal except for automatically unfair reasons or on discriminatory grounds; secondly, the statutory right to request flexible working or certain statutory rights to request training; and, thirdly, statutory redundancy pay.
I turn to employee shareholders wishing to return to work earlier than originally planned from maternity, additional paternity or adoption leave. When returning early from these types of leave, employee shareholders will need to give 16 weeks’ notice, compared to six weeks for employees returning from additional paternity leave or eight weeks for employees returning from maternity leave or adoption leave. The noble Lord, Lord Pannick, proposes with Amendments 83 to 89 to take out the employment law references in Clause 27, where it states what rights the employee shareholder will have that are different from those of an employee. This includes removing the distinguishing features of the clause and therefore it will remove choice from the options that employers can consider when taking on staff. The amendments would create an employment status that is essentially the same as that of “employee”, but where the employee shareholder would be given fully paid-up shares. In effect, we would be regulating for an additional employment status that essentially already exists in that of “employee” in order for the individual to be given shares. As the noble Lord, Lord Pannick, knows—he is supported in this by the noble Lord, Lord Adonis—employee ownership, either through direct employee share holdings or shares held in trust on behalf of and for the benefit of employees, is already a well known concept that is in use in the labour market. Companies are already free to offer shares to their employees.
My honourable friend Jo Swinson, the Minister for Employment Relations and Consumer Affairs, is chair of the implementation group taking forward the recommendations of the Nuttall review which is promoting the employee ownership agenda. The Government do not want to create an additional burden by regulating for something that can already take place in the labour market and that an employer can already offer. Such action would not help growth.
I should like to answer some questions that were raised by noble Lords. First, my noble friend Lord Deben stated that, as he saw it, there was no support from business. I have listened very carefully today to the comments made by other noble Lords. It might be helpful for noble Lords to know that Neil Clifford, the chief executive of Kurt Geiger, the shoe retailer, has stated that this measure would,
“provide a massive boost to innovation and enterprise”.
Becky McKinlay, who runs Ambition, a marketing communications company, is cited as saying that,
“she would have welcomed such a scheme when she started her marketing communications company, Ambition, six years ago because she could not afford to outbid her peers on wages”.
I could go on.
The noble Lord, Lord Pannick, raised the issue of why we think there is a statutory right to request flexible working and why it is unnecessary for employee shareholders. The statutory right to request flexible working creates a structure for conversations between employees and employers about changes to ways of working that will be mutually beneficial. Employee shareholders will have a greater interest in the performance of their employer as it is linked to the value of their shares. We consider that employee shareholders are more likely to request flexible working if they think it will help them and the company and do not need the statutory right to request. Employee shareholders can still make non-statutory requests for flexible working.
My noble friend Lord Strasburger raised the issue of which rights will increase motivation. As we see it, this new employment status will increase motivation as the employee shareholder will own shares from the outset and capital gains on these shares of up to £50,000 will not attract capital gains tax.
Viscount Younger of Leckie
The overall package of the employee shareholder, with the extra risk as well as the extra reward, is designed to ally the employee with the employer more readily. The motivation will be there because the employee will feel more aligned to the objectives of the company and will help more towards building and growing the company. That is one of the clear objectives behind this scheme.
The noble Lord, Lord Pannick, raised the issue of the legal consequences of selling rights. A full equality impact assessment has been done and no significant discrimination issues were identified. On the European law issues, I can reassure him that no European guaranteed rights have been affected.
My noble friend Lady Brinton asked whether we can ensure that an employee shareholder is treated fairly and not sacked just because their employer does not like them or has argued with them. An employee shareholder would still retain the majority of protections such as, as I mentioned earlier, automatically unfair dismissal rights and rights underpinned by EU law and discrimination legislation. If an employee shareholder was dismissed in any other circumstances, they would not be able to claim unfair dismissal at an employment tribunal, which we understand. Employees do not get the general right to protection against unfair dismissal or to statutory redundancy pay until they have been with their employer for two years, so there are already employees who currently do not have these rights.
In conclusion, Clause 27 creates a new employment status that gives companies and people more choice. This new status is a creative scheme for companies and people who wish to use it. It gives them a new opportunity to better share the risks and rewards of the business. I hope noble Lords realise that this new, innovative status is a force for good in the labour market, and that they will withdraw their amendments so that companies and people can benefit from this additional choice.
Baroness Brinton
I was slightly confused by some of the Minister’s earlier response on the employee status for employee shareholders. I would welcome clarification on whether they are actually regarded as employees, generally, or whether the only respect in which they are not employees is where those rights have been specifically removed by the Bill.
Viscount Younger of Leckie
I can confirm that it is an entirely new status, so the individual who agrees with their employer to a contract to be an employee shareholder is not the same as an employee.
Viscount Younger of Leckie
I would be delighted to furnish the noble Lord with whatever information I can find, but I remind him—he may well know the statistic—that the total estimated number of businesses in the UK is 4,794,000. Therefore, breaking down the figure to 6,000 perhaps re-emphasises that this employee shareholder status is not for every company. It is aimed at a particular type of company, and it is important to round off this debate by emphasising that this is not as big a deal as some noble Lords are making it out to be.
Baroness Brinton
I apologise for intervening again. Can the noble Viscount explain what niche group of companies this provision would interest, given that in our discussion on the first group of amendments, when I outlined the problems facing high-tech, leading-edge companies going through rapid growth—which Ministers have told us was exactly the audience the clause was aimed at—the Minister said that it was probably not appropriate for them? Perhaps he could cite the type of company it is appropriate for.
Viscount Younger of Leckie
I re-emphasise that the Government stick by their idea and plan that the provision will suit small start-up companies, but not exclusively those. However, from my noble friend Lady Brinton’s comments, it certainly does not seem to suit the companies that she has been in touch with, and I thoroughly respect that. I say again that this will not suit every company, but I have given quotations from individuals who seem to think that this is a good, innovative new scheme, which I very much welcome. I hope that it will take off, despite the fact that it is obviously quite contentious.
Viscount Younger of Leckie
My Lords, in Amendment 95 my noble friend Lord Flight proposes a new clause relating to the publication of guidance on the new employment status. He makes a good point on the need for guidance. The Government agree that guidance should be available to help companies and employee shareholders fully understand all the implications of offering or accepting these contracts. It has always been our intention to publish guidance on the new status. The issue of guidance is an important one. Good, clear and accessible guidance will be vital to both companies and employee shareholders. We want to ensure that people enter into these contracts with their eyes open.
I will outline what the Government propose to publish by way of guidance and explain what that guidance will cover. The .gov.uk website is the new centralised place for publication of government services and information. The website already has a number of pages that provide an overview of the different types of employment status—such as worker and employee—and list the rights that are attached to them. We will provide an equivalent page on the new employee shareholder status.
Within these overview pages there are links to more detailed information on each individual employment right, and these pages will also be updated to take account of the new employment status. People who look for information on employee shareholder contracts will be very clear which rights they are entitled to and which rights do not apply to the status. This will help them to decide if an employee shareholder position is suitable for them.
Changes to these pages are being revised at the moment and we will be in a position to share draft copies with you before this clause is debated on Report. The Government will also update guidance on the tax treatment of shares and capital gains tax to make it clear to employee shareholders what their obligations are and to set out how the associated capital gains tax exemption and other relevant tax treatments will work.
Any contract of employment is an agreement between an employer and employee and is the basis of the employment relationship. We believe that contracts work best when people and companies are free to decide the terms that best suit their business needs, and to attract the right people to their companies. We will provide guidance for companies to enable them to understand the new status. Companies would do well to take note of the comments of my noble friend Lord Flight on the importance of drawing up good employment contracts that apply equally to the statuses of employees and workers.
While I understand my noble friend’s intention behind this amendment, we believe it is not necessary to legislate on this matter. To state this in the Bill would just introduce more legislation, which in turn would create more red tape for businesses. As the Government have already committed to publish guidance, I hope that with these assurances my noble friend will be willing to withdraw his amendment.
Baroness Brinton
I apologise for intervening. I am grateful for many of the points the Minister raised about guidance and other things that will come forward to us, I hope, before rather than on Report. On a technical point, I wonder whether those who raised issues in this debate could be copied into any correspondence rather than it just going to the single noble Lord who raised the point.
Viscount Younger of Leckie
My noble friend makes a very fair point. Of course I will copy in all noble Lords who should or would like to be copied in.
Enterprise and Regulatory Reform Bill
Debate between Viscount Younger of Leckie and Baroness Brinton(11 years, 10 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Viscount Younger of Leckie
My Lords, Amendments 28DZB and 28EB are intended to ensure that artistic works can continue to be used in two particular ways after the repeal of Section 52 of the Copyright, Designs and Patents Act, or CDPA for short: first, that it shall not be an infringement to use an image of an article protected by copyright in a film, photograph or book; and, secondly, that it shall not be an infringement for new designs to use motifs from artistic works protected by copyright. For example, following the repeal of Section 52, a publisher who reproduces a photograph of any artistic work in a book may need to obtain permission to do so. Similarly, the scope for follow-on design may be restricted. The amendments are intended to make special provision for those circumstances.
The repeal of Section 52 means that all artistic works, irrespective of how and by whom they are used, will be treated equally under the law. The amendments seem to be intended to create special cases for particular uses of works. It is not clear that there is a compelling reason for some artistic works to be treated differently in that way. For example, why should it be necessary for a filmmaker to obtain permission to reproduce a painting by Francis Bacon, but not for another artistic work, such as a designer lamp?
Amendment 28DZC would create an exception that would cover the situations outlined above, but it goes further. It would in some circumstances allow the production of replicas and not just images of articles protected by copyright. As drafted, this would not be compliant with existing law.
There is another aspect to consider. In December, the Government announced changes that will be made to copyright exceptions. These will include, for example, an amended quotation exception, which will permit the use of photographs of artistic works in situations that the courts determine to be fair, and new exceptions for education. Those could cover some uses envisaged under the amendment. I reassure the Committee that the issue can be returned to when we have some experience of how the new arrangements work.
I shall pick up a number of points raised by noble Lords. First, I did indeed spot the article in the press this morning concerning the family business of a well known member of this Government. I think that the question of the noble Lord, Lord Stevenson, was: is it true to say that the wallpaper produced by the Chancellor’s family-owned interior design business will qualify for copyright protection? The repeal of Section 52 could benefit anyone who owns the copyright in a wallpaper, but not all wallpaper will qualify for copyright protection. That will depend on, for example, whether the wallpaper meets the requisite standards to qualify for copyright protection and is, for example, sufficiently artistic and original. Ultimately, that will be a matter for the courts to decide. The Government and the Design Council consider that the repeal of Section 52 will benefit young designers, as it should lead to UK designers developing new designs in markets that become less dominated by copies of artistic works. I hope that noble Lords find that particular example helpful.
It is important to address the point raised by the noble Lord, Lord Stevenson, concerning consultation. Indeed, it was an issue addressed by the noble Baroness, Lady Warwick. It concerns what consultation there will be before the repeal of Section 52. The UK is one of the few member states that has such an exemption. Further consideration will be given when the Government consult on how and when to bring that into force. Further to that, I reassure the noble Lord, Lord Stevenson, that the Government have discussed the repeal of Section 52 with interested bodies, including representatives of sellers of replicas of classic design furniture, such as Scott Howard Office Furniture. We have also had discussions with the Publishers Association, the chairman of the IP Bar Association and Professor Lionel Bently.
The Government will consult formally on how and when the repeal should take effect. We want to hear from affected firms to ensure that the right transitional arrangements are in place to allow them to adjust—for example, by modifying their supply agreements where necessary. The Government believe that it will be business as usual for many British firms who manufacture or sell affected replicas.
The noble Lord, Lord Stevenson, highlighted the question of how Clause 65 is supported by designers. Designers argue that the law undermines the integrity of the design industry and may make British companies less willing to support long-term investment in areas such as furniture design than their European competitors. I quote Sir Terence Conran:
“By protecting new designs more generously, we are encouraging more investment of time and talent in British design. That will lead to more manufacturing in Britain, and that in turn will lead to more jobs—which we desperately need right now”.
Tom Dixon, a British designer, has said:
“Current copyright laws leave designers woefully under protected compared to similar creative professions. This initiative is a small step toward establishing much needed protection of valuable intellectual property”.
The Government have considered these issues very carefully. I hope that in the light of the above, the noble Lord, Lord Stevenson, will withdraw his amendment.
Enterprise and Regulatory Reform Bill
Debate between Viscount Younger of Leckie and Baroness Brinton(11 years, 11 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Baroness Brinton
My Lords, I certainly will not rehearse the arguments—in fact I have torn up half of what I was going to say after the excellent opening speech of the noble Baroness, Lady Hayter, on this particular amendment. But I want to report particularly that when the Liberal Democrats debated our policy paper, Decent Homes for All, we heard of some very personal examples from members that I found profoundly shocking. They included one letting agent who had taken on a policy of no single parents at all, even if they were offering a three-month deposit as a guarantee and even if they were happy to provide—which I would not have been—a separate guarantor. This particular letting agent had just decided that single parents, mainly mothers, were no good. This parent, in particular, had no form of redress at all to that.
What is in front of us today is an utterly reasonable way of getting that redress. I am grateful to the noble Baroness, Lady Howe, and the noble Lord, Lord Deben, for making the point that this is actually much more about redress and consumer rights. It is rare to see an amendment that is so widely supported not only from within the House of Lords but also in another place by various people, including Mark Prisk, Annette Brooke and others from the government side. I hope that even if the Minister cannot give us an instant answer today he will be able to engage in discussion with those who have spoken in the debate on this amendment prior to getting to Report stage.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)
My Lords, it may not surprise my noble friend Lord Deben that I do indeed have some speaking notes, but I also hope that I can attempt at least to answer the questions that have been raised this afternoon by noble Lords. I know that these issues have been raised before, and I have considered carefully the amendments, arguments and indeed endorsements of the noble Baroness, Lady Hayter, for regulating the letting sector, particularly the ones that were mentioned this afternoon. She raises a very important issue.
I fully recognise the noble Baroness’s commitment in championing the interests of consumers in this area and take her concerns very seriously. It is helpful that she has brought it up in the context of this Bill. I note and respect the intervention of my noble friend Lord Deben in this respect as well. I know that the Housing Minister is aware of these concerns but I will raise them with him for further consideration. It is clear from the speech from the noble Baroness, Lady Hayter, that he—Mark Prisk, my honourable friend in another place—is aware of the issues that she has mentioned.
The noble Baroness, Lady Hayter, raised the issue in terms of a need for a mandatory redress to protect consumers, particularly those who are the most vulnerable. The Government are indeed keen to promote a greater use of redress but, understandably, want to avoid increased costs which might fall on landlords and tenants which a new mandatory regime would bring. While the Government acknowledge that poor practice exists in some parts of the letting sector, Ministers believe that new regulation would be disproportionate and would drive some businesses from the market. This would increase costs for consumers and reduce the choice and availability of accommodation on offer to tenants.
I can reassure noble Lords that letting and management agents are already subject to consumer protection legislation. For example, the Consumer Protection from Unfair Trading Regulations 2008 protect against giving false or misleading information, not acting with the standard of care and skill that is in accordance with honest market practice or claiming falsely to be a member of a professional body or approved redress scheme. The Unfair Terms in Consumer Contracts Regulations 1999 provide protection against unfair contract clauses, particularly where they are hidden in the small print.
Consumers who are treated unfairly or are charged unreasonable fees by an agent can seek help from their local trading standards officers, who have civil and criminal enforcement powers. The Office of Fair Trading has been investigating practices in the lettings sector and will be producing a report shortly including recommendations on how enforcement bodies can work to raise standards. We look forward to considering its report and recommendations. I hope that this particular point will go some way to reassuring the noble Baroness on the points that she has raised.
In addition to the protection offered by the consumer protection legislation, it is estimated that around half of all agents belong to voluntary schemes which set standards and offer redress if things go wrong. We invited industry bodies to work with us to improve the quality and coverage of self-regulation and in 2010 we endorsed the industry-led SAFEagent scheme. SAFEagent is designed to help consumers understand the benefits of using agents with Client Money Protection, by developing an easy to recognise logo. We are aware of the need for consumer awareness and also the importance of ensuring that vulnerable people are well informed, and indeed are advised as to what to do and where to go for help.
We have also published top tips for both landlords and tenants setting out the benefits of using an agent that belongs to SAFE agent or one of the professional bodies offering the right protections. We will continue to work with Citizens Advice and other bodies to ensure appropriate information is available. Citizens Advice provides help and advice on lettings over the telephone, online and face to face. In the light of these existing schemes and the consumer protection legislation in place, we have no current plans to introduce further statutory regulation. We are, however, keen to do everything possible to ensure that consumers are well informed and empowered to exercise their rights.
I was grateful for the intervention from my noble friend Lady Gardner who spoke most eloquently on the issue of the regulation of managing agents. I am aware that several issues have been brought to the Housing Minister’s attention in relation to letting agencies and residential leasehold and I am certain that managing agents are part of this. I am sure he is aware of your ongoing interest in this matter, but I will also inform him of the comments you made today. These are important issues to raise—as has been pointed out by the noble Baroness, Lady Gardner, there is a shortage of 300,000 houses in the UK. The letting of some of these properties must be effected fairly and consistently.
I hope that the noble Baroness, Lady Hayter, is reassured and will therefore be prepared to withdraw these amendments.