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New Deal Employment Conditions

Volume 589: debated on Thursday 30 April 1998

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asked Her Majesty's Government:Whether an employer who engages an employee under the New Deal for the young unemployed is legally obliged to pay the going rate for the job; whether he is legally obliged not to dismiss another worker in consequence of engaging the New Deal employee; and what other constraints are imposed, and by whom they are enforceable, in respect of the £60 subsidy paid to him. [HL1604]

The Minister of State, Department for Education and Employment
(Baroness Blackstone)

Except in rare circumstances, the law of the United Kingdom does not recognise a "going rate for the job". Wages are either set individually or through collective bargaining. It is not clear how the Government could give enough certainty to a condition requiring payment at such a level to render it enforceable and this has not been done. An employer who engages an employee under the employment option of the New Deal for 18–24 year olds is required to pay the New Deal employee at least the full amount of subsidy paid by the Secretary of State, and expected to pay more. Where the employer fails to pay the full subsidy, the Secretary of State will seek to recover it and may terminate the agreement.It is a condition of payment under the employer agreement that no existing employee has been dismissed or made redundant in order to recruit or retain a New Deal employee.The quality criteria used for evaluating New Deal employment opportunities include the expectation that employers will pay the employee a wage which is higher than the amount that they are receiving in subsidy, and one which corresponds to the level of payment that would normally be given to other employees doing similar jobs in that organisation. Other constraints which are imposed are:each New Deal employee must receive at least one day per week, or the equivalent, of good quality training leading to an approved qualificationthey must all agree an Individual Training Plan which sets out what this training will involvethe progress of the participant against their training objectives must be regularly monitoredNew Deal employees must be offered access to a personal supporter in the workplace.

asked Her Majesty's Government:Whether an employer agreement concluded when an employer engages a New Deal employee is enforceable in whole or in part and, if so, whether the employee has the right to enforce it either through the contract of employment or otherwise; whether the employee has any remedy if he or she believes the employer is misusing the £60 subsidy; and whether the employee is protected against dismissal, or action short of dismissal, on the part of the employer where one of the reasons given is a complaint by the employee about the misuse of the subsidy or failure to honour the agreement. [HL1605]

In the opinion of the Secretary of State, the employer agreement constitutes a binding and enforceable contract between the employer and the Secretary of State. Under that agreement the employer undertakes, among other things, to take the New Deal employee into Class 1 employment. As a consequence, the employee should benefit from a directly enforceable contract of employment containing the terms of his or her relationship, including pay. Irrespective of this, however, it is the intention of the Secretary of State to see that employers keep their side of the bargain reflected in the employer agreement by monitoring and, where necessary, enforcement.The New Deal employee can inform the Employment Service of any concerns that the agreement is not being met through a confidential telephone hotline, or through confidential discussion with his or her ES New Deal personal adviser. As an employee in the eyes of the law, a New Deal employee will have the same employment protection, and the same capacity, where a period of continuous service is a prerequisite of such protection, to earn employment protection as any other member of the employer's workforce.Where the employer is in breach of the terms and conditions of the employer agreement, the Employment Service can take any or all of the following actions, depending on the circumstances:

  • rescind the agreement
  • stop future payments
  • cease further client referrals
  • make recovery, if possible, against other or future payments
  • take the employer to court.