HMRC has confirmed that with effect from 2 July 2018, it has changed its enforcement policy for NMW compliance where there has been a transfer of employment under the Transfer of Undertakings (Protection of Employment) Regulation 2006 (TUPE).
Prior to July 2018, HMRC’s approach was to hold the former employer (the transferor) responsible for any penalties due in respect of NMW arrears accrued before the TUPE transfer.
HMRC has now confirmed that following a TUPE transfer it will enforce all NMW liabilities including the full financial penalty against the new employer (the transferee).
This isn’t great news for those considering the acquisition of a business or tendering for a new contract.
Greater due diligence is now required to ensure that detailed information about NMW compliance is provided and if possible, appropriate warranties and/or indemnities are sought from the transferor to provide for any risk.
For more on TUPE visit our TUPE help for employers page.