As a worker’s employment does not cease in the event of a TUPE transfer but transfers over to the transferee, the Employment Appeal Tribunal (EAT) held in Mears Homecare Ltd v Bradburn and ors that the obligation on the employer to maintain records with regard to the national minimum wage and to produce those records when requested to do so, also transfers over.
Basic facts
The claimants in this case were employed by Mears until 31 October 2016 when their employment was transferred to new employers under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).
At the beginning of February 2017, the claimants served protection notices under section 10 of the National Minimum Wage Act 1998 (NMWA) asking to inspect their wage records for the proceeding 12 months, spanning nine months when Mears had been their employer and three months with the new employers.
As the employers did not respond within the 14-day period required by section 10(9) of the NMWA, the claimants lodged tribunal proceedings under section 11 of NMWA for a declaration and compensation.
Relevant law
Section 9 NMWA requires employers to keep pay records; section 10 entitles workers to inspect and examine them; section 11 states that if a tribunal finds in favour of the claimant, they “shall make a declaration to that effect” and “pay to the worker a sum equal to 80 times the hourly rate of the national minimum wage” in force at the time.
Section 54 NMWA defines the meaning of worker, employee and contract of employment.
Tribunal decision
Upholding the claims, the tribunal ordered the employers to pay £600 to each of the claimants.
Mears appealed on the basis that, when the production notices were issued, it was no longer the claimants’ employer under section 4(1) of TUPE. This states that, after a TUPE transfer, contracts transfer to the new employers “as if originally made between the person so employed and the transferee”. In addition, it argued that the obligation to keep and preserve minimum wage records under the NMWA transferred over.
EAT decision
The EAT agreed that under section 4(1) the contract of employment does not terminate when a relevant transfer takes place. Instead it continues as though it had originally been made between the employee and the transferee.
In terms of the NMWA, section 54 makes clear that “employer” is the person by whom the employee (someone employed under a contract of employment) is employed.
In this case, the claimants did not cease to be employed when their employment transferred over. Instead their contracts continued as though they had always been with the transferee. All that changed was that “a new employer seamlessly stepped into the shoes of the old”. As such, the obligation to maintain records under the NMWA also transferred to the transferee.
Upholding the appeal, the EAT concluded that the tribunal had wrongly focused on the identity of the employer rather than the key question, which was whether the employment under a contract of employment had ceased.