National Minimum Wage Bill, 2000: Committee Stage (Resumed).

SECTION 15.
Debate resumed on amendment No. 33:
In page 12, between lines 40 and 41, to insert the following subsection:
"(4) This section applies to an employee in circumstances described insubsection (1)(a) or (b) whether he or she entered employment, or continued in employment on attaining the age of 18 years, before or after the commencement of this section, but the employee’s entitlement to remuneration as provided for in subsection (1) shall be only in respect of any period remaining after the commencement of this section of the employee’s first and/or second year after so entering employment for the first time or, as the case may be, so attaining the age of 18 years and continuing in employment.”.
-(Tánaiste and Minister for Enterprise,
Trade and Employment).
Amendment put and declared carried.
Question proposed: "That section 15, as amended, stand part of the Bill."

The section undermines the cardinal principle of the Bill as it allows discrimination against those aged between 18 and 20 years. For all of the reasons given in a different context this morning, there is no argument for a modest wage being further eroded for those covered in section 15(a) and (b) and in the Schedule listed thereafter. I do not know if the people who drafted the Bill consulted the Employment Equality Authority. There is an Act, the name of which I cannot recall, which prohibits discrimination against workers aged over 18 years. Does this section comply with that? I do not want to rehash arguments already advanced. The amendment proposed by the Minister is fine as far as it goes but it does not tackle the heart of the discrimination which continues against those aged between 18 and 20 years. For that reason, I oppose the section.

This is a shameful provision. There is no justification for this kind of discrimination against people over the voting age and the age at which they can join the army and be killed in action. However, apparently they are not fit to qualify as recipients of the national minimum wage. I am astounded the Government is introducing this provision which will be a grievous disappointment to thousands of students, particularly those at third level. Whatever about the earlier argument about people attending school and the application of the national minimum wage at 16 years being a disincentive to stay at school, we are now talking about third level students. The Union of Students in Ireland engaged a market research company to conduct a survey on the dependency of students on part-time work. It found that 22% of students who work part-time earn less than £3.50 per hour and 43% of students who work part-time earn less than £4 per hour. These students, who are among those who desperately need the income, which is why they work, would have anticipated that they would have been included in national minimum wage provisions. However, the Minister has dashed this expectation. Those aged 18 to 19 years are now legally entitled to £3.52 per hour and those aged 19 to 20 years to £3.96 per hour, if my percentages are correct.

The minimum wage, even at £4.40, could have been significant for students working part-time. The Government is betraying this section of the population and young workers who are not students. I want the Minister to justify why this discrimination is being enshrined in legislation in 2000. This section not only applies 80% and 90% of the minimum wage to those aged 18 to 20 years but, if my reading of the Bill is correct, to anybody who does not start work for the first time until they are 19 or 20. A person entering the workforce for the first time at 20 could start at the 80% level. This is unbelievable. The Minister should accede to the position put by Deputy Rabbitte and me that this section should be removed, lock, stock and barrel.

I did not table any amendments to this section although I was concerned about reducing the age from 18 years to 16 years. I am also perturbed about this section. I have no problem with the recommendation of the commission regarding young people on a training course which will advance their careers. Perhaps it was thought that with the increased numbers going on to third level and to do courses, not many young people would get a job at 18 years and would receive the minimum wage when they got a job at 20. The recommendation of the commission's report is out of date because it stated that most European minimum wage legislation had a different rate for younger people. The UK provided for an age limit of 22 years. However, I share the concerns expressed by other speakers. The Minister should look again at the circumstances of a person who takes a job at 18 years and stays on. If they receive training, that is fine.

However, there is a possibility that an employer could exploit a young person. If a young person starts working at age 18, between then and 20 years old they are paid 80% and 90% of the minimum wage. Is there anything to stop an employer saying to that young person at age 20 that, because he or she is sufficiently familiar with the job, he or she will be sent on a three year training course, which means the poor creature will have to make do with 75%, 80% and 90% of the minimum wage for three more years? That does not seem illegal under the Bill. Section 16 states: "Subject to sections 17 and 18, where an employee who has attained the age of 18 years undergoes a prescribed course of study or training authorised by the employer within the workplace . . . ”.

I am anxious that no loophole is left in the legislation to allow for a young person to be subjected to a percentage of the minimum wage for five years. It would be extraordinarily inequitable, yet that possibility exists from my reading of the legislation. I have also tabled an amendment to try to ensure a young person does not undergo a period of three years of training, leave for another job and undergo another three years of training, because that possibility of exploitation also does not appear to be covered by the Bill.

I do not know whether in the drafting of section 15 it was assumed that most young people taking a job at 18 years old would undergo some type of training automatically. That is not the case for many jobs. Many young people complete their leaving certificate by age 18 and enter the workforce. For example, they might get a job in a bank. I am sure they would be paid more than the minimum wage there, but we have seen banks paying low wages in recent years to young people starting off. Those young people would not be part of a formalised training programme and may do jobs behind the counter but would not serve customers.

I would like reassurance from the Minister of State that something could be done to the section to ensure a person who enters full-time and permanent employment after age 18 is paid the full minimum wage. Whatever about one year after, two years after is excessive.

We do not want to take up time voting on this provision but it is clear from the range of views of the Opposition that there is genuine concern about it. I was not persuaded by Deputy Joe Higgins's earlier arguments about the aged 16 to 18 years category. I have had representations from school teachers who say they are losing bright kids from working class areas because of the job situation. However, I feel strongly about this issue under discussion. This does not need to be included. I do not want to delay the Bill but the arguments Deputy Owen has added to those made before she came to the meeting are valid.

I am happy to take the baton from the Minister who could not be present. I agree with Deputies that we are trying to ensure there is a floor through which people will not be allowed to fall. We are starting from that basis and we all aspire to a higher minimum wage, especially for young people. As Minister of State with responsibility for labour affairs, I have encountered many abuses, especially of young people, of the Protection of Young Persons (Employment) Act which was introduced by the previous Government. I share Deputies' concerns that we should get it right on this occasion.

The thinking behind the measure is that an experienced employee is more valuable to an employer than a new entrant. The national minimum wage commission recommended a three year period for new entrants but the interdepartmental group considered that it should be limited to two years. This was done having regard to the social partners.

Deputy Rabbitte mentioned the Department of Justice, Equality and Law Reform. I assure him that this Bill was agreed by other Departments, including the Attorney General's office and the Department of Justice, Equality and Law Reform. On the specific point raised by Deputy Owen, that position is unlikely to arise but I accept that that is not an argument. We have encountered this before in the many examples given in the debate on the Copyright and Related Rights Bill.

It is important to note what Deputy Owen said. The intention is that the need for the provision will be reviewed in consultation with the social partners in light of two years' experience. If that has not been signalled before, I am doing so now. The example given by Deputy Owen should be central to that process of review. I ask that we proceed on the basis of the Government amendments and I am stating the Government position. However, I assure Deputies that the review process will take account of the point raised by Deputy Owen.

Will the Minister of State justify the 80% and 90% provision? He did not do that.

I justify it on the basis that these ideas came from the minimum wage commission and an experienced employee is of more value to an employer than a new entrant.

A 25 year old could be inexperienced.

I am conscious and aware of that.

A person could change jobs. The provision is ridiculous.

This scheme is up for review after a two year period. The Government would be anxious that the issues raised are taken into account in that review.

Where a person enters employment at age 17 and three quarters, for example, they would only receive 70% of the minimum wage until they reach 18 years old. They would then receive 80% and 90% over two years. If that person stayed one year with that employer, received 80% of the minimum wage and then changed jobs, does the new employer have to honour that? It is these issues which will end up in legal argument in the courts or before rights commissioners. In the meantime, while the person has grown older, they will have lost out. There is no embargo on an employer not taking that year into account.

The position is that they would have to honour and take account of that first year.

In the second employment?

Question put.
The Select Committee divided: Tá, 8; Níl, 7.

  • Ahern, Michael.
  • Brennan, Matt.
  • Callely, Ivor.
  • Daly, Brendan.
  • Fleming, Seán.
  • Kitt, Tom.
  • Lenihan, Conor.
  • O’Flynn, Noel.

Níl

  • Boylan, Andrew.
  • D’Arcy, Michael.
  • Hayes, Brian.
  • Higgins, Joe.
  • Owen, Nora.
  • Perry, John.
  • Rabbitte, Pat.
Question declared carried.

I wish to point out that the monitors showed the bells ringing for a division on another committee. Only one bell rang and there was some confusion. It is an unsatisfactory situation which could catch people out and something should be done to rectify it.

I thank the Deputy for bringing that to my attention. If the bell was not ringing——

The bell rang but the monitor showed it was for another committee. No second bell rang for this committee.

I appreciate the Deputy bringing this to my attention and I will have it investigated as it is a matter of concern.

I suggest we have our own tone for the committee.

A second indication on the monitor may be necessary.

I will ask the convenors to investigate the matter and ensure it does not recur.

SECTION 16.

I move amendment 34:

In page 12, subsection (1), line 41, after "Subject to" to insert "subsection (3) and”.

This is a technical amendment which arises as a consequence of introducing a new subsection under amendment No. 37. Subsection (1) must be governed by it and, therefore, the introduction to subsection (1) must be amended to include reference to subsection (3).

Amendment agreed to.

Amendments Nos. 36 to 39, inclusive, are related to amendment No. 35 and they may be taken together by agreement.

I move amendment 35:

In page 12, subsection (1), line 42, to delete "prescribed".

This section deals with training rates and I feel it is very weak. This is one of the primary issues relating to the national minimum wage whereby we are legislating to give people less than the minimum wage but for a very good purpose. I have nothing against the concept of people in training getting a percentage of the minimum wage. I did not understand what was meant by the phrase "undergoes a prescribed course of study". Does this refer to a course in an institute of technology, a PLC or a FÁS course? It is entirely unclear.

The Bill provides that "prescribed" means "prescribed by regulations made under this Act by the Minister". However, the way the section is drafted could lead to confusion, and my amendment seeks to delete "prescribed" and amendment No. 36 seeks to insert "such course of training to be prescribed in regulations made by the Minister,". It does not change the intent of the section, but makes it clearer. I see the Minister indicating that he thinks it is a good idea.

I accept the amendment.

I do not mean to be awkward, but I thought the merit of "prescribed" is that it referred to an authenticated, validated course, which I thought might be good. Am I correct in this?

We feel these amendments bring clarity to the meaning of "prescribed" when reading the section in isolation. Section 2 says ""prescribed" means prescribed by regulations made under this Act by the Minister".

I was talking about the amendments tabled by Deputy Owen. Is the Minister accepting amendment No. 35?

But that seeks to delete the word "prescribed".

Amendment No. 36 seeks to insert it.

Forgive me.

Amendment agreed to.

I move amendment No. 36:

In page 12, subsection (1), line 44, after "hours," to insert "such courses or training to be prescribed in regulations made by the Minister,".

I wish to comment on the amendments which have been grouped together. My amendment No. 39 provides for something similar to that proposed by the Minister in amendment No. 38. When we discuss the section I want to speak in greater detail about what is meant by "prescribed" as Deputy Rabbitte is correct in calling for further clarification on what will be prescribed.

Let us consider a person in employment who takes up a prescribed course either inside or outside the workplace, completes the course, stays in the job for another year or two and then moves to another employer. Nothing in the Bill prevents a new employer from saying to the employee that while they undertook training with somebody else, it is not altogether relevant to their current position and that they are being put on a new prescribed course. The new company may have a bona fide prescribed course available. My amendment seeks to ensure that once one period of training has been done an employer shall be guilty of an offence if they oblige an employee to start another three year period of training while paying them 75%, 80% or 90% of the minimum wage.

We are talking about people who by and large will not have much formal education. It is possible for a person who completes a three year course with one company to appear not hugely valuable to another employer as they might still be very young and have left education after primary school. A person may present to an employer on the basis of having completed a three year training course in store-keeping, for example, and may then move to another job in which an employer might arrange for them to do a further three years' training.

The Minister's amendment is not as strong as I would like it to be. The Minister states that subsection (1) does not apply to an employee who has already undertaken, before or after the commencement of the section, a course of study or training which is similar in purpose or content etc. The phrase "similar in purpose or content" is open to exploitation because employers only have to tell their employees that their courses are not the same as those the employees undertook in their previous jobs. For example, they might include some reception work, driving or some other element of training which was not included in the previous courses.

Once a person has been subjected to one three year training course, I believe they have adequately served their time at a minimum or low wage level. Irrespective of the course content, such people would be more experienced and more valuable to subsequent employers. If employers want people to undertake additional training, they should pay them the full minimum wage. People should only be subjected to one three year training period.

The percentages of 75, 80 and 90 are to apply pro rata to each one-third of a course’s duration. Where there would not be prescribed training within a company, would an 18 year-old be entitled to the full minimum wage rate?

Yes. The intention here is to support training.

The Minister of State's affirmative answer to my question means that training will be eliminated to a certain degree. If a person is taken on as an apprentice at 18 years of age and feels he will only receive 75% of the rate if he participates in training but 100% if he does not, he will want to stay as he is.

It is in a company's interest to provide training.

Yes, but my point is that people will receive the full rate even if they are not trained and that is a disincentive to their participation in training.

It is in a company's best interests to train and up-skill its staff in order to improve productivity. I do not accept that any disincentive exists in that regard.

The Government amendment achieves the objective of preventing employers abusing the training provision by spuriously and repeatedly placing employees on similar training courses. We want to achieve the same objective as Deputy Owen but our amendment allows an employer to avail of the training provision only once in respect of an employee unless the training course differs in purpose and content and it also allows a new employer to avail of the provision if the training is of a different type to that previously undergone by the employee with a previous employer. For example, if a person had received training in the retail sector and subsequently moved into the software sector, their new employer would be entitled to avail of this provision.

We have spoken about the need for up-skilling and lifelong learning. It is important that employees would be in a position to undertake training more than once during the course of their working lives and that they would be encouraged to do so by their employers. A balance must be struck between this objective and allowing an employer to abuse the intent of the provision by repeatedly placing employees on training courses. The amendment only permits an employer to avail of the training rate once in respect of an employee unless the training course in question is different but a new employer may place an employee on the training rate where the training is not similar to that previously engaged in.

The proposed regulations to be prescribed under this section would provide that a qualifying course of study or training would be for a minimum period of three months, must involve a minimum of 10% direct study or training and must also contain the following essential elements - the acquisition of skills and/or knowledge to enhance the work performance of the employee on completion of the course; direct study or training; workplace training; supervision during workplace training; a record system; an assessment or certification procedure or written confirmation of the employee's completion of the course, which shall include the level of attainment by the employee of the objectives of the course which must be countersigned by the employee. A further important element is the need for a written document setting out the course title and objectives and an outline plan detailing the approach to be followed, the record system and the certification procedure. The above criteria are based on FÁS training specification standards.

The Minister of State has not satisfied me that somebody could not be on a merry-go-round in regard to this provision. I agree that we should encourage training and that the number of employers who train and up-skill their staff is insufficient. However, this legislation provides employers with an out to allow them to place people on ongoing training. We have had schemes in the past where special rates were paid to employers if they took people off the live register when we had very high unemployment. Those people were effectively used as cheap labour for the 12 month period for which the special payment applied at the end of which, hey presto, they were no longer suitable for the job and were replaced by another group of people in respect of which State benefits applied.

The Minister of State went some way towards taking on board the sentiment of my amendment. He referred to the example of a person in the retail sector moving into the software sector. It is highly probable that someone going into the software sector would be in receipt of more than £4.40 per hour and that the rate would still be above £4.40 per hour even if they were to receive the 75% training rate.

One three year period of training is the most a person should be expected to complete on a minimum wage basis. They could be expected to participate in additional training in subsequent jobs but should not be expected to do so on the basis that they would receive 75%, 80% or 90% of the minimum wage rate. I urge the Minister of State to reconsider this provision which is open to exploitation.

We did not receive a note from the Minister on prescribed courses. I am very concerned about this section because I do not have any sense that firms, whether big or small, are in any way prepared for these types of training courses. What will happen on 2 April if a firm states that it will pay its employees £3.30 per hour - 75% of the minimum wage - even though they are not engaged in training? On 2 April, the employer may call those employees in, state that they are to be paid £3.30 per hour even though the minimum rate is £4.40, but that the employer intends to declare they are on a training course. Will the Minister's regulations be published at that stage, will the employers have their training courses up and running and will there be any training places available in FÁS? They are not in the legislation but they will be in the regulations. I have an idea what will be in those regulations; they will have to be of three months' duration, make up 5% of normal weekly hours with an assessment certificate to be awarded at the end of that period. There are many small firms with only a few employees which must deal now with a situation where employees will be absent when they have to go for external training because there is no internal training system.

What will happen on 2 April when an employer tries to pay someone who does not consider himself in training but is told on that day that he is in the first third of his three year training period? That person could be paid £3.30 per hour from that date, £3.50 a year later and £3.96 the year after that although he has already been with the company for three years. The Bill should have defined prescribed courses so employers could have arranged for them to take place in-house.

Much of the training should take place in-house. The apprentice scheme does not have enough places for apprentices to go back to college for the education module. I am worried that there will not be college places for those people who are supposed to spend 5% of their normal weekly hours in training. The courses are all full. There are no free teachers waiting for all these trainees to appear from small firms throughout the State. There will be serious problems with this part of the Bill when it is introduced.

Speaking as an employer, staff, regardless of whether they are on a prescribed course or not, will feel they will be entitled to £4.40 after 1 April. There will be parental pressure for £4.40. There are very few courses in retail. FÁS is totally booked out and RGDATA has no recognised course. A majority of employees for whom there is no prescribed course will feel automatically entitled to the minimum wage regardless of the training element. Most employees will expect the minimum wage and training which they will feel should be funded by the employer. It will be difficult to police.

Employees are aware of their entitlements and may feel they are being penalised by being put on the first tier of training after two years of work. Skills shortages exist in every area. Employers offer much more than £4.40 an hour to attract staff. Prescribed training, however, will be difficult to police. Who will assess training? The Minister expects log books to be kept which will specify the nature of the course and its duration. That is a cop out. It will not happen.

The case has been made.

I am conscious of the points which have been made but these issues could be raised in relation to any legislation. I have given some ideas about the regulations. There will be provisions. Training courses could take place over a three month period. The Department will monitor this. This is a new Bill and there will be issues about which people will be concerned. The amendment the Government has tabled deals with the major concerns in the area.

I accept that a person could follow a course as short as three months. That person would be on 75% of the national minimum wage for one month, 80% for a second month, 90% in the third month and in the fourth month would receive the full minimum wage. Government amendment No. 37 deals with a person who starts training six months before their eighteenth birthday. That person would be on 70% of the national minimum wage but would still have to undergo the three modules of 75%, 80% and 90%.

Section 16 applies sub-minimum rates of pay of 75% in the first one third, up to a maximum of 12 months, 80% in the second third, up to a maximum of 12 months and 90% in the third one third, up to a maximum of 12 months, during a prescribed course of training or study. The purpose of this amendment is to ensure that the section applies to existing employees undergoing training before 1 April.

There are two possible types of employee in this category: those currently undergoing training who have not reached 18 years of age when the Bill commences and those undergoing training who have reached 18 years of age when it commences. The amendment provides that these two categories of employees may have the training rate applied to them when the Bill is commenced, but only in respect of the portion of training or study remaining after the commencement of the Bill. In the case of those who are not 18 at the time, it applies when they reach 18. An employee aged 18 or more who is a year into a three year course of training or study on 1 April would only be eligible to be paid the second year rate and the third year rate from the following 1 April. Similarly, an employee who had done two years of training upon reaching 18 in July will be eligible for the third year rate from July. It is similar to the last provision for the transitional period.

What happens if someone is already on a training course which is not a prescribed course? There has been no indication to employers what will constitute a prescribed course. Have there been discussions with the employers' organisations so they could set modules for training? There could be an anomaly for a person in the middle of a course now because the section only applies to training or study which is subsequently prescribed for the purposes of subsection (1). If the Government did not prescribe a course, would the employer have to put the employee on to the minimum wage even though he or she is still training? These are the issues that will cause problems.

Does Deputy Higgins wish to comment?

Yes. I had hoped, while I was out of the room, that the Minister would have accepted amendment No. 36.

He is accepting it.

That is encouraging. Section 16 is open to abuse. At all times we must look at the worst case scenario and ensure that unscrupulous employers are not enabled to use provisions to avoid paying the national minimum wage.

The definition of training authorised by an employer within the workplace can be very subjective. Lengthy courses on how to grind a piece of beef or shape a hamburger could be used as an excuse.

Or sweeping up sawdust.

Yes. Has the Minister outlined in detail the mechanism for avoiding this? Perhaps he dealt with this matter while I was out of the room.

This matter has been dealt with. I will give the Deputy a copy of what I said.

I am very concerned about the possibility of abuse in this area.

I did not receive an answer to my question. As soon as the Bill becomes law, will the regulations be ready to indicate what is a prescribed course? The Minister has given us some of the characteristics of a prescribed course but these regulations should be available to employers. They should, in fact, be available now so that employers can prepare for the legislation. However, the Minister has introduced the Bill too late to allow time for that. There are employers who wish to be fair to their employees but, on 2 April, they will not know whether a prescribed course comes within the regulations.

I foresee the provisions of this section leading to severe difficulties. Young workers who are not represented by a trade union will be terrified to complain for fear they will lose their jobs. I would be much happier if a starting date were laid down, perhaps six months after the Bill is enacted.

The regulations will be available.

Amendment agreed to.

I move amendment No. 37:

In page 13, between lines 12 and 13, to insert the following subsection:

"(3) This section extends to an employee who is undergoing a course of study or training authorised by his or her employer which is subsequently prescribed for the purposes of subsection (1) and who-

(a) has not attained the age of 18 years at the time of the prescribing of the course of study or training, or

(b) has attained the age of 18 years at the time of the commencement of the course of study or training (whether or not he or she commenced that course before or after the commencement of this section),

and the date by reference to which a one-third periods of the total study or training period shall be calculated for the purposes of subsection 1) as so extended is the date (before or after the commencement of this section) on which the employee’s period of study or training actually commenced, but the employee shall be entitled to remuneration at the relevant percentage of the national minimum hourly rate of pay, as provided for in subsection 1), only in respect of that part of such one-third period or periods remaining after the date on which-

(i) this section commenced,

(ii) the course of study or training was or is prescribed, or

(iii) the employee attained or retains the age of 18 years of age,

whichever is the later date.".

Amendment agreed to.

I move amendment No. 38:

In page 13, between lines 12 and 13, to insert the following subsection:

"(4) Subsection (1) does not apply to an employee who has already undertaken, before or after the commencement of this section, a course of study or training that is similar in purpose or content, while employed by the same or a different employer.”.

Amendment agreed to.

I move amendment No. 39:

In page 13, between lines 12 and 13, to insert the following subsection:

"(3) An employer who fails to pay the minimum wage to an employee on the basis that the employer requires an employee to undergo more training with that employer despite having previously attended a course of study or training as prescribed in regulations although such training was undertaken with a different employer shall be guilty of an offence. Such offence shall be subject to the penalties and proceedings as set out in section 36.”.

I would have preferred the Minister to accept this amendment than tabling his own. However, half a loaf is better than no bread and the Minister has accepted the spirit of my amendment.

Amendment, by leave, withdrawn.
Question proposed: "That section 16, as amended, stand part of the Bill."

I am opposed to this section.

Question put and declared carried.
Sections 17 and 18 agreed to.
SECTION 19.

Amendments Nos. 40, 41, 41a, 44, 78a, 79, 83, 86, 87, 88, 96, 97 and 98 are related and may be discussed together, by agreement. Is that agreed? Agreed.

I move amendment No. 40:

In page 13, subsection (1), line 30, before "hourly" to insert "average".

With the agreement of the Select Committee, I propose to adopt a number of Opposition amendments in respect of the Schedule and table them in the name of the Minister. These are amendments Nos. 80 and 89 which relate to service pay, amendments Nos. 82 and 92 which relate to unsocial hours, amendments Nos. 87 and 97 which relate to tips and amendments Nos. 89 and 99 which relate to holiday and Sunday premia.

At least four of the amendments mentioned by the Minister of State are not included in the grouped amendments. Are we discussing the amendments referred to by the Minister of State but not included in the group?

No, not at this stage.

The Minister should not confuse matters by referring to amendments which are not being discussed at this time. Of the amendments mentioned by the Minister, only amendments Nos. 87 and 97 are being discussed now.

It was my intention to signal my intention to deal with specific issues and to give Members an indication of what is proposed. The four issues to be dealt with are service pay, unsocial hours, tips and holiday and Sunday premia.

Is the Minister of State hinting that these will be removed completely?

I am giving more that a hint. Officially, it is a hint at this stage.

Does the Minister propose to make no change on shift premium?

That is correct.

I have the power of the trade union movement behind me. We might be here until Bank Holiday Monday if we do not come to an agreement on the shift premium. I am merely hinting, as is the Minister.

We are referring to Nos. 2, 4, 8 and 10 in the Schedule on pages 28 and 29. Is that correct?

That is correct.

Amendments Nos. 40 and 41 are necessary drafting amendments. The point of the provision is the calculation of the average hourly rate of pay in a pay reference period. The amendments clarify this point beyond doubt.

Amendment agreed to.

I move amendment No. 41:

In page 13, subsection (2), line 37, before "hourly" to insert "average".

Amendment agreed to.

I move amendment No. 41a:

In page 13, subsection (2), line 39, to delete "included." and substitute the following:

"included,

Provided that, for the purpose of calculating the hourly rate of pay in a specific reference period of an employee who is not remunerated out of public moneys, the said Schedule shall be construed and have effect as if paragraphs 2 to 6 and 8 to 10 of Part 1 of the Schedule were deleted from that Part and were inserted in Part 2 of the Schedule.”.

I am proud of this amendment and I am sure the Minister of State will agree that it is drafted neatly and has the merit of circumventing the entire might of the Civil Service, which sought to rule out all our earlier amendments.

The amendment achieves a number of aims. It tackles the reckonable, non-reckonable issue in one paragraph, it tackles the manner of calculation of the hourly rate in one paragraph and it excludes workers who would be a cost on the Exchequer - presumably, since we are talking about a national minimum wage, the Government would not want a divergence to grow up between the public sector and the private sector - and it would then cause paragraphs 2, 3, 4, 5, 6, 8, 9 and 10 to be transferred from Part 1 to Part 2 of the Schedule. In other words service pay; shift premium; unsocial hours premium; piece and incentive rates - that is badly worded; post of responsibility; tips or gratuities in the manner prescribed; service charge; holiday premium and Saturday, Sunday and so on.

I may be wrong but I think the Minister of State has just indicated agreement, more or less, with the exception of the shift premium - agreed to leave No. 7 in Part 1.

The Minister of State is also leaving in No. 9.

The important one is the shift premium. I am puzzled by the stance on this. Whatever the arguments might be for including service pay, I cannot understand the reason for including shift premium. There is a cycle and a formula established and acknowledged in industry where one gets 16.6% for two shift working, 20% for three shift working and 33% for continuous shift working.

I am bemused by the argument - it must have something to do with the discussion we had with the Minister about exchange rates, which was an odd one at this stage of the European market, but which is the subject of recommendations to her in respect of trading into Britain, should the relationship between the punt and the pound change. Something similar must apply here about certain industries trading into Britain, such as the rag trade. According to my calculations, conservatively and realistically speaking, an employer who pays £3 per hour would comply with this Bill under that system. In the case of shift working, the worker would be entitled to £3 per hour and £1 on shift and, say, 50p on service pay - it could be £2.50 - or another mix and one has a rate in excess of £4.40. It is offensive to include shift premium.

By definition, shift premium is an additional payment to the basic rate. For people working unsociable working hours on the factory floor to the extent of qualifying for shift premium it is not part of the normal basic pay and I cannot understand the argument for including it. It would undermine whatever value is in this Bill. The Tánaiste agreed this morning that in urban Ireland it has little impact. We want to say to people working in a clothes factory in Donegal, Macroom or wherever else that their shift is included.

The Minister of State has made a pre-emptive strike which is calculated to speed up the procedure. I understand that and credit is due for his willingness to succeed where the Minister failed. The shift premium, however, is central to the argument because we spend a great deal of time necessarily teasing out detail that concerns the operation of the Act. The heart of the matter, so to speak, is shift premium. We have no choice but to take a stand on this. I do not know how the trade union movement was not successful and I know it sought to change this. It is an important issue. It undermines the value of the Bill and I ask the Minister of State to rethink it.

Deputy Rabbitte's amendment was so ingenious that I did not seek to find other words to better it and asked if I could table a similar amendment by putting my name to his amendment. I sought under amendment 78a to get around the procedure that prevented us from tabling amendments. I welcome that the Government has seen a certain amount of light to accept the spirit of the amendments which the Opposition parties tabled.

I do not like the way we have to get around the rules by dividing private employers in private industry and the public sector. My fear is that if we were left with an amendment in that form one could conceivably say that this legislation would be for the private sector and if Government so minded might not apply it to the public sector. That would not be good legislation. However, we have no choice. My way of getting around it was to put in an amendment to the start of the Schedule to insert after the word "components", "in the private sector". My advice was that if it was accepted my other amendments seeking to remove reckonable pay elements would fall into place and could be moved. We are all trying to get at the same point by whatever ingenious method we can find to amend the legislation.

The Irish Congress of Trade Unions makes it quite clear that service pay, shift premium, unsociable hours premium and public holiday and Saturday and Sunday provisions are not normally consolidated into pay rates for the purpose of calculating overtime rates and other pay related matters. They are therefore making the case that they should not now be taken into account in calculating the minimum hourly rate. The Minister is going along with three of the four - service pay, unsociable hours premium, and public holiday and Saturday and Sunday provision. I do not know why the advice is that those three can be taken out but the shift premium cannot. The concept of a shift premium exists because of the nature of shift work which involves doing something that is less favourable than working the standard nine to five job. It involves coming to work at odd hours, perhaps when there is no public transport available, and one is compensated for that. It might involve working all night, or working on a Sunday from 2 p.m. to 10 p.m. when most people are with their families. That might be all part of the job. There may be no choice if one wants to keep the job and shift working is obligatory. I cannot understand why the Minister has been advised that the ICTU is to be told in no uncertain terms that shift premiums can be consolidated into pay rates, but the other three issues need not be.

I welcome the fact that the Minister is removing gratuities and tips. If ever there was a mean spirited section in legislation, that was it. I am sure that, in his time, the Minister of State has done waiting.

My older children have.

I would say they were very cross with the Minister of State when he produced this legislation.

The Minister is including the amount of any service charge distributed to the employee through the payroll. I think the Minister is wrong there. That should be excluded too. Some firms use the term "tip", posh firms use the term "gratuity", and even more posh firms use the term "service charge". The Minister is making fish of one and flesh of the other. He is excluding tips and gratuities that are paid into a central fund managed by the employer, as he should, because tips and gratuities are variable and might not be the same amount each week. It would be disgraceful to include them because then a person's wage would be based on what they got in tips, apart from the fact that it would be very awkward for an employer if he or she had to calculate the minimum wage every week on the basis of the amount of gratuities and tips in a cup at the pay desk. However, the Minister is leaving in the service charge.

I understood that was also being removed. Deputy Owen is speaking on the basis that it is not.

It is not.

For clarity, could the Minister speak again on that.

The signal I have given refers to service pay, unsociable hours premium, any amount distributed to the employee in tips or gratuities paid into a central fund managed by the employer and paid through the payroll, and public holiday, Saturday and Sunday premia where any such holidays or days are worked.

I thank the Minister. I apologise for the interruption.

I am sure the Deputy will want to object to the inclusion of service charges, having overcome the Scrooge like mentality of the Minister of State and the Minister in taking tips from people who are working and who only get tips if the customers decide to give them. The service charge is also variable. It depends on how many people come into a restaurant or hotel. There might be twopence half-penny to divide among the staff some weeks. I ask the Minister to look at that again.

I welcome the fact that the Minister has removed the Sunday premium. Such premia are paid because it is not desirable to have to work on Saturdays, Sundays and public holidays. Most of us would prefer to have those days off. Let me give two examples. A part-time worker working 30 hours a week, eight hours of which are on Sunday, attracts an unsociable hours premium of 50%. Given a basic hourly rate of £3.90, the basic weekly wage would be £117. The Sunday premium is based on eight hours plus 50%, which is four hours. That works out at £15.60, and the total weekly earnings would be £132.60. When that figure is divided by 30, the number of hours worked in the week, it gives an hourly rate of £4.42. That would mean that an employer could pay a basic hourly rate which is less than the national minimum wage and not be in breach of the legislation. I am glad wisdom has prevailed over there.

Let me give another example. An employer could be paying a basic rate of £4 for a 39 hour week, five days out of seven, of which eight hours are worked on Sunday. In that case the basic weekly wage is £156. Eight hours plus 50%, equals to four hours, is £16, bringing the total weekly earnings to £172. When that is divided by 39 it comes to £4.41, 1p above the minimum wage. Again there is no breach of the law and the employee's basic hourly rate is £4.

Leaving some of those elements in would have meant that an employer could get away with not paying the full £4.40, albeit tax and so on has to be taken out of it. I am glad the Minister has seen the light in regard to some of these sections. However, I strongly urge him to at least go back and look at the service charge. Nos. 5, 6 and 9 have been left out. The Minister may have some argument about the others, but the service charge definitely should be removed.

The Minister of State had partly redeemed himself in my eyes when I was under the impression that the service charge was being removed. I am astounded. Lest we waste time because of a misunderstanding, the amount of any service charge distributed to the employee through the payroll means the 10% or 12.5% at the end of restaurant bill. I take it that is what is meant. The Minister of State will have to explain the distinction between tips and gratuities and the service charge distributed through the payroll. What we can be certain about now is that if this were to stand as it has been adjusted by the Minister, mean employers will probably shift to a service charge distributed to the employee through the payroll as opposed to allowing staff to take tips as they arise, in order to get around the legislation. This is really mean. We are talking here of the poorest section of the workforce, the most vulnerable, people who have a struggle to make ends meet, and this little extra, the service charge, which should be thought of in terms of boosting low pay is now to be reckoned in the calculation for what is the legal minimum. Any TD on the level of income and expenses we have who would vote for that——

If it would be helpful, may I make a brief comment? Is the Deputy finished?

I had not dealt with shift premium.

On that question, it is important that we all bring our own experiences to this committee. I heard a politician recently - I think it was Deputy Barrett - talking about the need to encourage people into politics from various backgrounds. On the issue of tips, my only daughter worked in a restaurant to supplement her resources with regard to her attendance at university. She is now in her first job but she worked in a restaurant in Paris for a year, and indeed in Dublin. I have a son also who is still in college who worked not just in a restaurant in Dublin but also in New York, so I know quite a lot about tips and their importance to young people. I share Deputy Higgins's concern with regard to the need to ensure that young people are protected in this legislation.

The Minister and I were keen to remove certain sections on this reckonable component and effectively move them into the non-reckonable components in Part 2. I am giving a signal that this will happen for those reasons, and I think the Deputy is right. If a person makes a choice to give a waiter or waitress in a restaurant a tip, whether it be in monetary form or through their Visa card, that tip should go to that individual. That is what we are doing here. That person is being given the choice to give a tip to that individual. As the Deputy rightly pointed out in relation to section 9, that would be the service charge applied by the restaurant owner and part of the overall bill, so there is a distinction.

I know the Deputy intends to refer to other areas but I have put my cards on the table with regard to what the Government wishes to do, and it is important that we do that. We are removing four dimensions to the reckonable component, including the question of tips. We are improving the position for workers in those situations. Some people will be unhappy with that but we are trying to achieve a balance in the Bill, and it has been drawn up by negotiation. The Government has had to make some judgments and that is what we are doing now. We are removing some of the reckonable components although the Government has made it clear where we should draw the line. We will not agree to moving the shift premium. That is a judgment we have made. I have sat on committees with some of the members of this committee and it is better that I put my cards on the table now rather than go around in circles. We are determined to have the correct balance but what we have done is significant. I expect members to come back and look for more but it is prudent at this stage to clarify the direction in which we are going.

In respect of shift pay then, the Government is not prepared to move, is that correct?

Chair, could we keep the discussion on the point of the service charge and try to dispose of that?

I am sorry, Deputy Higgins had not quite finished.

I will be brief so that Deputy Rabbitte can come in. The tips and the gratuities arise largely where it states on the bill "service non compris”. One calculates 15% and then leaves a 15% tip. In other restaurants the 15% will be calculated into the bill. A distinction is being made by including one and leaving out the other and some mean minded employers will move immediately to the service compris and include, in the reckoning for the minimum legal wage, the tips that otherwise would not have come in. The Bill will hit waiters, waitresses and porters in hotels by giving employers a way to act like Scrooge.

The Deputy is under-estimating the generosity and the wisdom of the customer.

Not everybody is earning £40,000, £50,000 or £60,000 a year. When ordinary people on the average industrial wage go out to eat they do not have lots of money to throw around. If a service charge of 12.5% or 15% is included in the Bill, most people would not have much money to add to that because they reckon that is for the employee. One might leave a small tip but if a service charge is not included, most decent people will add on 10% or 15%. The Minister is saying that even when the service charge is included and it is reckonable, the punter might throw in a few extra bob for the waiter, waitress, porter or whoever is in this position. In the real world, however, that will not benefit them. People on this side of the table would have very divergent ideological views but there is unanimity that the Minister should remove section 9 also.

I did not know we were going to deal with this but now that we are, as well as an injustice, there is an inconsistency in the Minister removing section 8 and not moving section 9. This is a hugely contentious issue and has been for years in trade union organised employments and one must presume, therefore, that it is at least as much so in non-trade union organised employments. For example, the pool came about because front house staff tended to get the tips and back staff did not. Back staffs were labouring in the kitchen in a difficult working environment and the guy with the nice manner and white collar waiting on tables, or woman as the case may be, tended to get the tip and as a result back staff rebelled and this arrangement of centralising the tips into a pool was agreed.

In terms of the service charge, one cannot be sure that the benefit of the service charge is passed on to the employee. The Minster talked about the consumer making a decision that the staff member should have the tip or whatever, but one cannot be sure that is passed on because it is structured into cost, etc. Given that section 8 is a non-reckonable component, there is nothing to prevent sections of the industry deciding that they will convert one into the other, so that the service charge will be reckonable and will be spread wider than it is at present. That is a factor that will erode the conditions of employment of workers in that industry who fall within this category. I do not understand the Minister of State's position. Why not leave in section 8 if he fervently believes his arguments in respect of it? I do not know why section 9 is different in terms of a catering establishment that leaves it to the consumer to tip the employee under that pooling arrangement to which I referred.

It is now habitual that an extra line is left on a Visa bill for the consumer to add an additional amount to the cost of whatever he or she has consumed, but under this arrangement the hotel owner may take into account that additional element in calculating the hourly rate. That would significantly reduce the hourly rate as between one establishment and another. The professional, organised establishment that has a service charge line and so on will be able to use it to depress the rate, but another establishment that leaves it to the customer to tip the person waiting on the table may not. It is an inconsistency and I cannot see how it can be justified.

I think the Minister of State misunderstands how a service charge will be added into the calculation of the minimum wage. A service charge is a moveable feast. A restaurant may charge a standard 12.5% or 15% service charge. The percentage of the charge may not vary, but the amount of food or drink consumed on a premises can vary not only from week to week but from day to day, therefore the percentage of service charge that is collected by the employer will be different from week to week. From the point of view of employers, this system will be a nightmare to operate because one week an employer might have only £100 in respect of the service charge payments to distribute among, say, ten employees and the employer must then make up the extra money to meet the £4.40 rate and another week the employer might have three times that amount to distribute and he or she would not have to pay staff the £4.40 rate.

Employers may move towards including a service charge in big writing on the menu. I agree with Deputy Higgins that because food and drink in a restaurant are expensive, if customers see that a service charge is included on the menu in big writing, they will not necessarily leave a tip. Because they are paying 15% of a service charge on top of the price of their meal, they believe that service charge will be creamed off and shared among the staff.

With regard to people filling in a service charge on the end of their Visa bill, such a service charge is a gratuity. Section 8 which is being removed refers to any amount distributed by the employer of tips or gratuities paid into a central fund. The service charge a customer adds to the end of his or her Visa bill is paid into a central fund. A central fund refers to the income of the employer. For example, an employer at the end of a night would calculate that, say, £500 was collected by way of tips or gratuities added on to bills and that the staff are entitled to the distribution of that at the end of the night or by way of the payroll.

The Minister of State is building in an inequity by leaving in the amount of the service charge. If the service charge was always the same and every employee knew ever week that he or she would get a particular level of service charge payments, one might be able to argue for it. If I was on the Government side, I would probably make a good fist of arguing that such a measure is equal, although it is not. The service charge payments collected in a restaurant will vary week by week or hour by hour because they will be based on the amount of food consumed. If an employer had a bad week, his staff might get twopence ha'penny in respect of service charge payments or if an employer had a good week, the staff would get a large amount in respect of such payments. I ask the Minister of State not to leave matters like that.

That is only one element but it is an important one. Deputy Rabbitte mentioned that there is a section for filling in a gratuity at the end of a credit card bill. That is a tip in the same sense as the customer who gives——

I made the same point as Deputy Owen; it is the same as a central fund. A customer is not giving, say, the £5 in cash, the amount is written on the customer's Visa bill and that gratuity goes into a central fund managed by the employer in exactly the same fashion as the other one.

While the individual tip was not reckonable, most restaurants have a pooling arrangement to ensure that the staff who are not waiting on tables are catered for, but gratuities included on credit card payments go into a central fund. The key point is that tips given to individuals are paid into a central fund for redistribution to the staff in accordance with custom and practice; they are not paid through the payroll. That is a moot point.

When the service charge is stated on a menu, the bill will include the price of the meal plus the service charge. Tips given to those waiting on tables and gratuities added on to credit card bills go into a central fund. That is what section 8 means and that section is being removed.

Where there is a collective agreement, such money in respect of gratuities will be distributed, but it was brought to my attention recently that it is by no means guaranteed that it will be distributed where there is not a trade union organised arrangement and a collective agreement providing for that.

The Deputy is correct. It is important that this issue is highlighted following the enactment of this legislation. The Deputy is correct that the pooling of tips would be accounted for in relation to the payment of staff. The Government is signalling that it wishes to ensure that the staff concerned get such tips separate from their rate of pay of £4.40 per hour. I will deal with this in greater detail when we debate the Schedule. We wish to ensure that not only customers' tips but the additional amount customers' include on their credit card in the form of a gratuity are passed on to the staff concerned. That is what is meant by section 8 and we want to get that message out. We will do that by publicising the Bill when it is enacted.

We are running out of time and we will not have time to make a decision. There are strong feelings on this section. We will adjourn the debate now and resume it at the next meeting. There will not be time to have a vote on it. Is that agreed? Agreed. What about the time of the next meeting?

There is a suggestion that 21 March would be suitable. I remind members that the Minister will be answering questions in the House on that date. It should have been 14 March but it was postponed for a week because of the national holiday.

Is there agreement to meet from 12 p.m. to 2 p.m. on Tuesday, 21 March? Agreed.

The Select Committee adjourned at 8.33 p.m. until 12 noon on Tuesday, 21 March 2000.