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Obligation to keep national minimum wage records transfers to transferee

06 August 2019 #Employment


Employers have an ongoing duty to keep sufficient national minimum wage records to demonstrate their compliance with the law.  If a worker feels that they have been underpaid they can request to see these and an employer should comply with their request within 14 days.  If they do not, the employer may be ordered to pay each employee up to 80 times the national minimum wage rate.  In the case of Mears Homecare Limited v Bradburn, the EAT held that the obligation to keep these records transfers to the transferee under TUPE.  

The EAT recognised that there are no special rules for this type of information under TUPE and so the usual principle that rights and obligations transfer to the transferee applies.  This is also more in line with the HMRC’s view on liability for national minimum wage which, since July 2018, has also transferred to the transferree (so that the transferee is liable for any underpayments even if they were not responsible for them).  However, it does pose practical issues for the transferee as the transferor will have control over collecting this data and, as it does not form part of the employee liability information set out under TUPE, there is no legal obligation on the transferor to supply this.

Transferees should protect themselves against the risk of such liabilities by ensuring the provision of this information is part of their standard due diligence pre-transfer.  They may also be able to request warranties and indemnities from the transferor or client, as appropriate, to limit their exposure in this regard.  Criminal liability for wilful failure to comply with national minimum wage requirements stays with the transferor and so, transferors who share this data with transferees, may still wish to retain a copy for themselves.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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Louise Keenan

Louise Keenan
Associate

E: LKeenan@clarkslegal.com
T: 0118 960 4614
M: 0779 900 7325

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