NMWM05380 - Entitlement to National Minimum Wage: effect of settlement agreements and HMRC settlements on NMW Officers’ investigation

When investigating National Minimum Wage cases NMW Officers need to confirm that the worker and employer have not entered into a settlement agreement which includes a negotiated settlement which will impact the National Minimum Wage position.

The following action should be taken in every case:

• When a complainant is first contacted, ask whether they are currently involved in conciliation action to settle an employment related dispute with their employer or whether there has been any earlier dispute, which led to a negotiated settlement. Obtain a copy of any settlement and send it to the Operational Advisory Team with full details. Continue to work the case as normal unless the complainant is the only worker, in which case suspend further action.
• Confirm with the employer that he has not entered into a settlement agreement for any workers for whom National Minimum Wage arrears have been identified and that there are no current disputes. Obtain copies of any settlements and forward them to the Operational Advisory Team with full details.
• Do not request arrears or send a Notice of Underpayment until the Operational Advisory Team has advised you whether or not to include arrears for workers who have entered into settlement agreements with their employer

Sometimes, settlement agreements are broad enough to reasonably include National Minimum Wage arrears, even where National Minimum Wage is not specifically mentioned in the terms of the settlement. In these circumstances National Minimum Wage arrears cannot be pursued under a separate action.

National Minimum Wage arrears should not be included in HMRC settlements for tax/National Insurance contributions. However, if it is discovered that this has happened then a legally binding agreement may have been formed and details of the case should be sent to the Operational Advisory Team.