Delegating powers to grant exemptions
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 public service agencies) 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. A power of exemption is distinct from a statutory exception. A power of exemption is a discretionary power delegated by an Act to a particular body or office holder 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 and have legislative effect. At the other end are concessions that are “one-off”, or minor allowances usually made to identified persons 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).
There must be good reasons to delegate a power of exemption.
Delegating powers of exemption should not be the norm. They should not be delegated to allow arbitrary exemption from the provisions of an Act, nor should they be delegated to patch up incomplete policy development.
If delegating a power of exemption would give the Executive the ability to change the scope or operation of an Act, or reduce 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 delegating 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.
A power of exemption that enables the decision-maker to vary the scope of legislation or that applies to a class of people or things will require a greater level of safeguards than a minor concession to a particular person that does not materially affect the scope or operation of the legislation. If exemptions to particular persons may give an unfair advantage, consideration should be given to allowing class exemptions only.
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 an exemption may be granted or the criteria for the exercise of the power should also be consistent with the purpose of the This is often incorporated into the criteria (see next point).
- Criteria for exercise of power—Legislation should set out the criteria for granting an exemptio 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 an exemption, although this requirement may not be necessary for minor or trivial exemptio
- Judicial review—The ability to seek judicial review of the exercise of an exemption power is an important saf 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 secondary legislation (and so subject to the publication, presentation, or disallowance procedures in the Legislation Act 2019)?
If the exemptions are to be secondary legislation, the empowering legislation must state that.
The empowering Act should state whether the exemption instrument is secondary legislation. The Legislation Act 2019 provides that all secondary legislation must be presented to the House of Representatives and is subject to disallowance, with limited exceptions. A class exemption that is of general application will usually be secondary legislation. A power to only exempt individuals or other named persons will often not be. However, the key question is whether the exemption is intended to have legislative effect according to the usual criteria (see 14.2 above). If a broad power to exempt individuals or other named persons and to set terms and conditions enables the maker to create what is, in effect, an alternative legislative scheme, it may be intended to be legislative.
Accordingly, a power of exemption tends to be legislative if one or more of the following apply:
- it applies generally (eg to a class of people or things)
- it enables substantive requirements to be imposed (eg through a power to impose terms and conditions) rather than merely disapplying part of the law
- there is a wide discretion in deciding whether to grant it, or
- it is so significant that it alters the scope of the empowering Act (rather than just creating an exception at the boundaries).
An exemption tends to be non-legislative if—
- it applies only to one or more named persons, or
- it reflects the application of clear statutory criteria to a particular case (ie where the granting of the exemption is merely the application of existing law set out in the empowering Act to a particular case, rather than the creation of new law).
In some cases, it will be appropriate to create two powers: a legislative power of class exemption (for which the usual Legislation Act 2019 safeguards of presentation, general publication, and disallowance should apply) and a non-legislative power to exempt one or more named persons (for which those safeguards are not needed).
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.