National Minimum Wage Records - a Warning to Business Purchasers

Under the National Minimum Wage Act 1998, employers are under a duty to keep sufficient records to establish that their workers have been paid the NMW. If employees believe they have not been paid the NMW, they can make a request to their employer to provide them with these records and the employer has 14 days to respond. Failure to provide these records within 14 days can lead to the employees being awarded 80 times the NMW rate outstanding.

In this case, the employees were employed by Mears Homecare Ltd (MC) until October 2016, when they TUPE transferred to a new employer. In February 2017, they made requests of MC to provide them with their last 12 months of pay records, as 9 months of records would have been held by MC and only 3 by their new employers. MC did not respond to this request within 14 days and the employees consequently brought proceedings against MC.

The Employment Tribunal (ET) concluded that MC was still the 'employer' for the purposes of the NMW legislation, even though the employees had TUPE transferred to a new employer in October 2016, and ordered MC to pay each of the employees £600. MC appealed this decision.

The Decision

The Employment Appeal Tribunal (EAT) allowed the appeal and overturned the decision of the ET. The EAT held that MC was not the party upon whom the requests under the NMW legislation should have been served because when the employees transferred under TUPE, their employment did not terminate and the new employer inherited all of the rights, duties and obligations in relation to their contracts of employment. This included the necessity to provide NMW records.

Comment

This case highlights that employers receiving employees under TUPE can be liable to provide NMW records for periods that the employees were not employed by them.

It is therefore essential that, included in the contract governing the transfer, there is a provision that full pay records relating to all transferring employees for the last 12 months are provided to the incoming employer immediately upon the transfer or that suitable indemnity protection is in place.

The outgoing employer will still remain liable for criminal sanctions if they have not kept the correct NMW records, as criminal liability will not transfer under TUPE. However the liability to provide 12 months of pay records rests on the incoming employer and they will be open to claims for compensation if they cannot provide relevant records within 14 days when demanded.

For more information please contact Michael Delaney in our Employment Law team on 01923 919 316, or complete the form below.