Updated NMW penalties could prove costly to new employers

The government department announced it has changed its approach to enforcing the NMW where there has been a transfer of employees from one employer to another under TUPE - the Transfer of Undertakings (Protection of Employment) Regulations 2006.

This new approach came into effect on July 2 2018 and as a result of the change, where there has been a transfer of employees under TUPE all NMW liabilities, including the full financial penalty amount, are now being enforced against the new employer (transferee).

This is a change to the position prior to July 2 2018 where the former employer (transferor) was responsible for all or part of any penalties that were triggered by arrears that accrued before the employees transferred under TUPE.

This change has a potentially significant impact on transferees as financial penalties of up to 200 percent of the pay arrears (capped at £20,000 per worker) are payable where the transferring employees have not been paid the NMW.