CHANGES TO NATIONAL MINIMUM WAGE ENFORCEMENT – WHERE DOES LIABILITY NOW LIE?

TUPE definition:

Transfer of Undertakings (Protection of Employment)

The national minimum wage is enforced by the HMRC and the enforcement measures available to it include service of notices of underpayment, civil penalties, “naming and shaming”, recovery of underpayments through tribunals or civil courts and lastly, criminal prosecution. These measures are aimed at protecting workers and demonstrating to the business community that non-compliance with national minimum wage legislation is unacceptable.

WHERE DOES THE LIABILITY NOW LIE?

Where staff are transferred from one employer to another under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), these liabilities used to lie with the former employer. However, since 2 July 2018 the HMRC have changed its approach in this regard. Where TUPE applies, all national minimum wage liabilities including full penalty amount are now applied to the new employer. This is regardless of whether the new employer was responsible for the underpayment or not.

WHAT DOES THIS MEAN FOR EMPLOYERS?

As much due diligence as possible must be carried out before the employees’ transfer date. This will ensure employers identify any instances of non-compliance and give them enough time to amend any indemnity clauses in commercial contracts.

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