National Minimum Wage record keeping obligation transfers under TUPE

The Employment Appeal Tribunal has ruled that the National Minimum Wage record keeping obligations transfer under TUPE under their judgement of 2nd May 2019.


This issue in the appeal was whether, following a relevant transfer within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”), the transferor continues to be bound by the duty, pursuant to s.9 of the National Minimum Wage Act 1998 (“NMWA”), to maintain wage records in respect of the transferred employees. The ET had held that the Respondent transferor continued to be bound by that duty and was therefore the appropriate subject of a production notice. The Respondent appealed.

Held: Allowing the Respondent’s appeal, the said duty transferred to the transferee upon transfer pursuant to Reg 4(2) of TUPE. Accordingly, the Respondent transferor was no longer required to maintain such wage records and was not required to comply with the production notice. There was no warrant in the legislative scheme for carving out an exception from the wide scope of Reg 4(2) in respect of NMWA matters. 

Organisations need to appreciate the implications of TUPE and undertake due diligence in relation to the former operations National Minimum Wage obligations. It is wise to have a NMW dummy audit to ensure that the new business operation understands the minimum Wage risk they may be taking on and also ensuring an appropriate transfer of relevant employment records that may be required under National Minimum Wage law and suitable mitigation protection.

Be aware that HMRC NMW auditors will hold the current organisation responsible for any breaches of NMW that have occurred over the prior 6 years even if that related to a time before ownership transferred, and the former arrangements liability has ended no longer exists. Underpayments are likely to become a liability of the new business operation where employment is continuous under TUPE.

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