Mears Homecare Ltd v Bradburn

On a relevant transfer under Transfer of Undertakings (Protection of Employment) Regulations 2006, employment continues rather than ceases. A transferor is therefore not a former employer within section 54(4) of the National Minimum Wage Act 1998 merely because the identity of the employer has changed.

Regulation 4(2) transfers all rights, duties and liabilities under or connected with the transferred contract, subject only to its stated exceptions. The statutory duty to keep and preserve national minimum wage records, and the consequential duty to comply with a production notice, pass to the transferee. Practical inconvenience and perceived anomalies cannot justify an unstated exception from that broad statutory transfer.

The claimants’ employment transferred from Mears Homecare Ltd to transferees on 31 October 2016. They subsequently served production notices seeking national minimum wage records covering periods both before and after the transfer.

The Employment Tribunal held that Mears, as transferor, remained subject to the record-keeping obligation and had failed to comply with the notices. It made the mandatory awards under section 11 of the National Minimum Wage Act 1998.

Mears appealed. The central issues were whether employment had ceased for section 54(4) purposes and whether the duty to maintain minimum wage records passed under regulation 4(2) of the Transfer of Undertakings (Protection of Employment) Regulations 2006.

1. Appeal allowed. The Employment Tribunal erred in treating the transferor as an employer whose employment relationship with the claimants had ceased for section 54(4) of the National Minimum Wage Act 1998.

2. Under regulation 4(1) of the Transfer of Undertakings (Protection of Employment) Regulations 2006, a relevant transfer does not terminate the contract of employment. The employment relationship continues, with the contract taking effect as if originally made with the transferee. In section 54, “employment has ceased” means that employment under the contract has ceased. A mere change of employer on a transfer does not meet that condition.

3. The transferor may cease to be the employer, but that fact does not terminate the underlying employment. When the notices were served, the relevant employer under the Act was the transferee.

4. Regulation 4(2) effects a broad transfer of all rights, powers, duties and liabilities under or connected with the transferred contract. The duty to keep and preserve minimum wage records is within that language. The related obligation to produce records also passes. None of the limited exceptions excludes obligations under the National Minimum Wage Act 1998.

5. Practical concerns about obtaining records, criminal exposure for pre-transfer conduct, employee-liability information, indemnities and administrative convenience did not alter the statutory construction. The obligation does not disappear; it transfers to the transferee. The production notices could not therefore be enforced against Mears as transferor.

• Employment Appeal Tribunal: Allowed Mears Homecare Ltd’s appeal and overturned the Manchester Employment Tribunal’s determination that the transferor remained obliged to comply with the production notices.
• Employment Tribunal (Manchester): On 8 January 2018, upheld the claimants’ complaints under section 11 of the National Minimum Wage Act 1998 and awarded each claimant £600.