Miles Farren
Posted on 30 Sep 2013

Will the abolition of the Agricultural Wages Board in England have possible consequences for succession under the Agricultural Holdings Act 1986?

One of the tests to be satisfied by an applicant for succession under the 1986 Act is whether the applicant is in occupation of a commercial unit of agricultural land.

A "commercial unit of agricultural land" is defined by the Act to mean a unit of agricultural land which is capable, when farmed under competent management, of producing a net annual income of an amount not less than the aggregate of the average annual earnings of two full-time, male agricultural workers age 20 or over.

Units of production are calculated on the acreage of the subject unit of agricultural land by reference to the Units of Production Order. This gives rise to the net annual income that the unit is capable of producing.

Historically, a comparison between the income calculated in accordance with the Units of Production Order and the income of 2 full-time male workers by reference to rates in the Agricultural Wages Order has been relied upon to determine whether an applicant is in occupation of a commercial unit or not. With the advent of the abolition of the Agricultural Wages Order (and therefore prescribed minimum rates of pay for agricultural workers) will the abolition of agricultural minimum rates have an impact on this calculation?

According to Defra it will not. Defra's view is that there is no provision in the legislation that any calculation of average earnings is required to be based on the rates of pay in the Agricultural Wages Order and further that there is no statutory requirement of how average earnings should be calculated. Defra take the view that the Agricultural Wages Order only sets out minimum hourly rates of pay which can be quite different to average earnings.

Defra believe that in practice, it will be left to the parties and their representatives to make suggestions to the First-Tier Tribunal Agricultural Land and Drainage (formerly the Agricultural Land Tribunal) as to what figure should be used based on available data about earnings. Defra offers as an example the Office of National Statistics' Annual Survey of Hours and Earnings as providing relevant data for farm workers.

The problem does not appear to arise in Wales as the Welsh Assembly plans to maintain an Agricultural Wages Board and therefore an Agricultural Wages Order in some or other format. At least, that is the position as we go to press but we understand that the Attorney General has now referred the Agricultural Sector (Wales) Bill to the Supreme Court arguing that the retention of the Agricultural Wages Board in Wales is outside the powers and competence of the Welsh Assembly because it relates to employment law rather than agricultural matters.

For further information contact Miles Farren on 0117 906 9304 or email miles.farren@michelmores.com