Mears Homecare Ltd v Bradburn

It is not correct to treat a transferor as remaining subject to the duty to keep National Minimum Wage records after a TUPE transfer; rather, Reg 4(2) of TUPE transfers the employer's rights, duties and liabilities connected with the contract to the transferee.

The claim concerned whether a transferor remained under a statutory duty to keep and produce National Minimum Wage records after employees transferred under TUPE. The employees served production notices under s.10 of the National Minimum Wage Act 1998. The Employment Tribunal held the transferor remained obliged to keep records and ordered awards for failure to produce. The matter was appealed to the Employment Appeal Tribunal, which was asked to determine whether employment "had ceased" for the purposes of s.54(4) and whether the s.9 duty to keep records transfers under Regulation 4(2) of TUPE.

(1) Overall disposition: The Appeal was allowed in favour of the view that obligations under the National Minimum Wage Act 1998 in connection with contracts of employment transfer to the transferee by virtue of Regulation 4(2) of TUPE. The Employment Tribunal erred in treating the transferor as remaining the employer for the purposes of s.54(4) simply because it ceased to be the nominal employer.

(2) On the meaning of "cessation of employment": Regulation 4(1) and (2) of TUPE operate as a statutory novation so that the contract continues as if it had always been with the transferee. In that situation there is no termination of the contract and therefore employment has not "ceased" for the purposes of s.54(4) of the National Minimum Wage Act 1998.

(3) On transfer of duties: The broad wording of Regulation 4(2) transfers "all" rights, powers, duties and liabilities under or in connection with the contract to the transferee subject only to the limited exceptions in Reg 4(6) and (7). The duty in s.9 to keep records falls within that transfer and therefore the transferee, not the transferor, is the party bound to keep the records and to respond to production notices.

(4) On alleged anomalies and enforcement: Practical inconveniences or anomalies do not justify carving out an exception to the blanket transfer in Reg 4(2). Practical protections are available by contractual arrangements, transferor retention of copies, or by enforcement and disclosure mechanisms. Criminal liability remains with the transferor where s.31 applies.

(5) Conclusion and order: The Employment Tribunal's reasoning was wrong to treat the transferor as the employer for s.54(4) purposes. The correct legal position is that the duty under s.9 NMWA transfers to the transferee and the production notice against the transferor was wrongly directed. The appeal was allowed to that extent.

• Employment Tribunal (Manchester) – Claimants succeeded on s.10/s.11 NMWA production notice complaints; award made (reasons set out in ET decision quoted at paras [43]–[54] of this judgment).
• Employment Appeal Tribunal – Allowed the appeal on statutory construction of Regulation 4(2) TUPE and s.54 NMWA; held obligation to keep NMW records transfers to transferee.