Marlow Inns Ltd v HM Revenue & Customs

An employee’s failure to complain about underpayment cannot, without more, create an estoppel preventing recovery of the statutory minimum wage. The statutory rights under the National Minimum Wage Act 1998 cannot be reduced by estoppel, since that would undermine the Act’s protective purpose. Silence or inaction does not represent that the employer is complying with the legislation, even where the employee knew of the breach and deliberately delayed making a claim. Any separate liability of the employee may instead concern negligence or breach of contract causing loss to the company, but that does not defeat the employee’s statutory entitlement.

Marlow Inns Ltd operated a public house managed by Edward Rehill, one of the company’s directors. He was paid £200 gross per week and later complained that he had not received the national minimum wage. The Commissioners issued an enforcement notice under section 19 of the National Minimum Wage Act 1998, assessing arrears of £9,349.

An appeal to an employment tribunal was dismissed as out of time. The Commissioners then brought proceedings under sections 19(D)(1)(c) and 17 to recover the unpaid sum. The county court dismissed the company’s appeal and rejected its proposed estoppel defence. The renewed application concerned whether a second appeal should proceed and whether the employee’s conduct could estop recovery.

1. Renewed application refused. Although the proposed issue concerning estoppel against the Commissioners could, in principle, be important, the second appeal test was not satisfied because the proposed appeal had no realistic prospect of success.
2. The statutory minimum-wage rights could not be cut down by estoppel. It was impossible to contract out of the National Minimum Wage Act 1998; allowing an estoppel based on the employee’s conduct would undermine the protection which the Act was designed to provide.
3. The employee’s silence or failure to complain did not represent that the company was complying with the Act. That remained so even if he knew of the underpayment and deliberately waited until retirement before claiming. Such conduct might involve a failure of duty, but it could not constitute the alleged representation.
4. Any possible claim by the company against the employee would instead concern negligence or breach of contract in failing to alert the company to the breach and accumulating liability. The court expressed no view on whether such a claim or any resulting loss could be established, and no such counterclaim had been advanced below.

Permission to appeal was therefore refused.

• Court of Appeal (Civil Division): renewed application for permission to bring a second appeal refused.
• Reading County Court: Judge Oliver dismissed the company’s appeal from the decision of Deputy District Judge Comiskey.
• Employment tribunal: appeal against the enforcement notice dismissed as one day out of time.