The National Minimum Wage Act 1998 requires employers to keep pay records.
Things become more difficult after a TUPE transfer and a recent case looked at whether the obligation to keep wage records remains with the transferor or transfers to the transferee?
Mears Homecare Limited v Ms C Bradburn & Others
Ms Bradburn and her colleagues transferred from Mears Homecare to a new employer under TUPE. Section 9 of the National Minimum Wage Act 1998 imposes an obligation on employers to maintain and preserve records of employees’ pay, even after employment has ceased. Three months later, the claimants served production notices on Mears requesting wage information under s10 of the Act, despite Mears no longer being their employer. Mears failed to respond to the production notices within the necessary period of 14 days.
The Employment Tribunal first had to consider whether Mears was the appropriate respondent or whether the notices should have been served on the new employer. The tribunal allowed the claim, finding that Mears was the correct recipient and ordered Mears to pay each of the claimants the sum of £600. It held that Mears Homecare continued to be bound by the duty to maintain records after a TUPE transfer and was therefore the appropriate recipient of the production notice. Mears appealed.
The appeal was allowed. The Employment Appeal Tribunal held that Mears was not the appropriate recipient of the production notices as employment had transferred for NMW purposes. With limited exceptions, all rights and liabilities transfer under TUPE, including the liability for pay records.
The effect of TUPE is that there was no termination of employment and therefore the liability to keep pay records transfers from the transferor to the transferee.
Whilst most agreements for the transfer of a business will have a requirement for adequate records to be provided to the transferee, this is an important reminder that transferees should ensure that they receive full pay records from a transferor to avoid these kinds of difficulties. Following the logic of this decision there is no obligation on a transferor to maintain or produce records for NMW purposes following a TUPE transfer.
Transferees may want to seek protection in the form of warranties and/or indemnities to avoid liability for claims that may follow from a failure to produce records.
If you have any queries in relation to TUPE or any other HR queries please contact our employment team on 01228 552600 or 01524 548494.