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Granting powers of exemption
In some cases, requiring a particular person to comply with legislation might be impractical or result in hardship to that person. In such cases, it may be necessary to empower a government body (including Crown entities and other State sector bodies) or office holders to exclude or exempt a particular person or class of people, transactions, or things from the application of an Act or regulations (see, for example, section 220 of the Health and Safety at Work Act 2015).
For convenience, the term “exemption” is used in this chapter to refer to all exemption powers regardless of whether they are called exemptions, waivers, dispensations, exclusions, concessions or otherwise. An exemption is distinct from a statutory exception. An exemption is a discretionary power granted to a particular body or office holder by an Act that, when exercised, will exclude or exempt certain things from the application of an Act. An exception is a provision in an Act that states that the law does not apply to a certain person, group, thing, or transaction.
Exemptions occupy a sliding scale and vary in terms of their significance and scope. At the one end of the scale are exemptions that vary the scope or application of an Act. At the other end are concessions that are “one-off”, or minor allowances usually made to individuals only. The more significant the exemption, the more significant the procedural safeguards required in respect of its exercise. In the case of minor concessions, additional procedural safeguards may be unnecessary.
A power of exemption is a form of delegated power (see Chapter 14), although at times the distinction between a power of exemption and a discretion is hard to identify.
There must be good reasons to grant a power of exemption.
Powers of exemption should not be the norm. They should not be granted to allow arbitrary exemption from the provisions of an Act, nor should they be granted to patch up incomplete policy development.
If a power of exemption would delegate to the Executive the power to change the scope or operation of an Act, or it reduces the accessibility of the law (because the law regarding who or what the legislation applies to is spread across specific exemptions and the Act), consideration should be given to whether that is a power better left to Parliament.
The Regulations Review Committee has expressed concern that in some cases exemptions have been so numerous and applied so broadly that the exemptions have supplanted the framework of rules to which they relate.
Factors that may favour the granting of a power of exemption are:
- an Act relates to a complex and rapidly developing field such that the boundaries may be difficult to foresee;
- fields in which an urgent decision on an exemption may be required;
- the circumstances requiring an exemption may be so exceptional or “one-off” as not to justify amending an Act;
- an area requires frequent adaptation to changing factual or policy circumstances;
- minor unforeseen developments in, or technical issues with, the law may arise that do not justify amending an Act; or
- compliance is impractical, inefficient, or unduly expensive but the policy objective can be achieved by imposing conditions on the exemption.
Legislation must specify appropriate safeguards to apply to powers of exemption.
An exemption that varies the scope of legislation or applies to a class of people or things will require a greater level of safeguards than a minor concession to an individual that does not materially affect the scope or operation of the legislation. If exemptions to individual parties may give an unfair advantage, consideration should be given to allowing class exemptions.
A power of exemption should generally be subject to the following safeguards:
- Consistency with purpose of the Act—The power must be exercised consistently with the purpose of the Act. The circumstances in which the exemption may be granted or the criteria for the exercise of the power should also be consistent with the purpose of the Act. This is often incorporated into the criteria (see next point).
- Criteria for exercise of power—Legislation should set out the criteria for granting the exemption. Clear criteria will reduce the likelihood of a successful judicial review of the decision to grant or refuse an exemption.
- Reasons—Legislation should include a requirement to give reasons for the exemption, although this requirement may not be necessary for minor or trivial exemptions.
- Judicial review—The ability to seek judicial review of the exercise of an exemption power is an important safeguard. This right should not be unreasonably restricted (see Chapter 28).
- Process review—Usually there should be a process (which need not be in the legislation, but may be expected by Ministers or select committees) to review exemptions at regular intervals to identify a need to amend the Act.
Two additional safeguards may also be appropriate: sunsets or reviews, and annual reporting requirements:
- Sunsets or reviews—The empowering Act may provide that an exemption may continue in force for not more than a certain period (for example, five years) (and is treated as revoked at the end of that period) or may require that exemptions be reviewed. This may be appropriate if exemptions under the Act are expected to be mainly of a short-term or temporary nature. It may also be appropriate if there is a special reason for requiring a regular review of exemptions (rather than leaving a review as matter of administrative discretion). A review may include assessing whether the Act itself should be amended. Providing for revocation is unnecessary if the legislative design of the Act contemplates exemptions that are relatively long-term or permanent in nature or if it is best left to administrative discretion as to when and how to prioritise reviews.
- Annual reporting requirements—The person or body that exercises the power may be required to submit a report to Parliament detailing the number of times and circumstances in which a power of exemption was exercised.
Will the power be subject to the publication or disallowance procedures in the Legislation Act 2012?
Legislation should clearly identify whether the power of exemption will be subject to the disallowance and/or publication procedures in the Legislation Act 2012.
For the avoidance of doubt, an Act should confirm whether or not the exemption instrument is a disallowable instrument or a legislative instrument, or both. Often a class exemption that is of general application will be a disallowable instrument and a legislative instrument. An “individual” exemption will often be a disallowable instrument yet not a legislative instrument (but in this case the legislation should provide for alternative publication requirements). Some individual exemptions will probably be neither, and publication may not be appropriate; for example, exemptions from wearing a seatbelts or helmets on health grounds in section 166 of the Land Transport Act 1998.
Legislation must contain express authority to impose conditions on an exemption.
An exemption may either be granted on a blanket basis or may be subject to specific conditions. The ability to impose conditions on an exemption is a useful tool to ensure that the exemption granted is no broader than is strictly necessary, but the power to impose conditions must be explicitly authorised by the empowering Act. Conditions must also be consistent with the purpose of the Act.