Employers have an obligation under the National Minimum Wage Act 1998 (NMWA) to keep pay records showing that they pay the national minimum wage (NMW). This requirement continues after employment has ended. The Employment Appeal Tribunal has looked recently at what happens when there is a TUPE transfer – does the transferor have to keep and produce those records for employees who have transferred to another employer?
In Mears Homecare v Bradburn, the employees transferred under TUPE. A few months later they requested pay information from their old employer (the transferor) as part of a query about payment of the NMW. The transferor didn’t respond within the time limit and the employees lodged an employment tribunal claim. The tribunal decided that the transferor was the relevant ’employer’ for the purposes of the NMWA. The query about pay related to the employees’ employment with the transferor and the duty to retain and produce pay records lasted beyond the end of employment. The tribunal ordered the transferor to pay compensation.
The Employment Appeal Tribunal disagreed. The employees’ employment had not ended – it had transferred to the transferee. When there is a TUPE transfer, the transferee steps into the shoes of the transferor in relation to the employees’ contracts. All rights, duties and obligations pass from transferor to transferee, including the obligation to keep and produce NMW records. The transferee was therefore the relevant employer, not the transferor. Any request for pay information should be made to the transferee, even though the request was for pay information which pre-dated their employment of the employees.
In this case, the EAT judges accepted that this situation is inconvenient for transferees who are required to produce another business’s pay records. They said that businesses should ensure that full pay records pass from transferor to transferee as part of the transfer. It’s worth remembering that criminal liability does not transfer under TUPE. Transferors should therefore ensure that the contractual paperwork also deals with the return of pay information if the transferor is ever prosecuted in relation to transferred employees.