After notice of underpayment issued: withdrawing and replacing a notice of underpayment
The legislation that applies to this page is as follows:
* National Minimum Wage Act 1998, sections 19F, 19G & 19H
Where a Notice of Underpayment has been served the notice can only be withdrawn and replaced if it is decided that it incorrectly includes or omits any requirement or is incorrect in any particular. A Notice of Underpayment is withdrawn and replaced by simultaneously serving two notices on the employer;
- a notice of withdrawal, and
- a replacement Notice of Underpayment.
Notices can only be withdrawn and replaced if authorised by the FLM in the same manner as NMWM13270. If the withdrawn notice is not going to be replaced please see NMWM14220
Notice of withdrawal
The notice of withdrawal must be issued in the same envelope as the replacement notice. It should be posted in the same way as the original notice, unless you have information to suggest that posting the replacement in the same way as the original may result in the replacement notice not being correctly served and/or, it is deemed appropriate to hand deliver the notice of withdrawal and accompanying replacement notice, see NMWM13285.
Replacement Notice of Underpayment
When compliance officers become aware that a notice needs to be replaced they should immediately notify their FLM. FLMs should discuss the case with their BUH and gain authorisation in writing before proceeding.
Where a replacement notice is to be issued this replacement notice must:
- Be issued at the same time as the notice of withdrawal (i.e. in the same envelope).
- Must not relate to any worker to whom the original notice did not relate
- Must indicate the material differences between it and the original notice
- Must indicate how the notice of withdrawal and replacement notice impacts on any appeal made against the original notice which has not been withdrawn or finally determined at the time the withdrawal and replacement notice is issued.
The replacement Notice of Underpayment is based on a standard notice with compulsory additional text added into the body of the text. When considering who should issue the notice of withdrawal and replacement notice please see NMWM13050.
If it subsequently becomes necessary to withdraw the replacement notice, no further replacement notice may be served. It is therefore imperative that any replacement notice is checked to make sure it contains no errors before it is issued.
The arrears on the replacement notice must be calculated using the rates applying at the date the replacement notice is issued. This means that if national minimum wage rates have risen since the original notice was issued, the arrears on the replacement notice must be recalculated.
Where arrears have been restricted to the six years before the date of service of the notice, section 19(7) NMW Act 1998 applies in relation to the replacement notice as if the reference to six years before the date of service of the notice were a reference to six years before the date of service of the original notice. In practice this means that the replacement notice may include arrears for periods more than 6 years old.
The replacement notice can include pay reference periods ending after the date of service of the original notice but cannot include workers not named on the original notice. The workers will need to be informed of the replacement notice, please see NMWM14240.
If a penalty was shown on the original notice and it is either being varied or not imposed by the second notice, then you must advise your nominated SAFE Officer accordingly.
Payments made in respect of original notice
If the arrears or penalty have been overpaid, you must check the current NMW Operational guidance for the action to take.
If the employer has now overpaid:
- some of the arrears to workers; you must inform your FLM and/or
- some of the penalty; inform your FLM and advise your nominated SAFE Officer that the amount overpaid towards the penalty must be repaid with interest (NMWM03090) within 14 days of the date of issue of the replacement notice, in accordance with the National Minimum Wage Act 1998. See also NMWM14250.
Employer has appealed
If the original notice is subject to a legal appeal at a tribunal or court you must contact the NMW Technical Team prior to withdrawing the notice. They will consider the possible legal consequences and contact the solicitor who is managing the defence of the original notice who will inform the relevant parties to the action. The employer may be invited to withdraw their appeal. If the employer no longer wishes to continue with their appeal the solicitor will advise them to contact the appropriate Tribunal to withdraw their appeal, otherwise the hearing may still proceed and unnecessary costs may be incurred. If the employer wishes to continue with the appeal and/or does not withdraw his appeal, the appeal against the original notice shall have the effect as if it were against the replacement notice. Alternatively the replacement notice provides another appeal period during which the employer may choose to submit a new appeal.
If civil proceedings have commenced in respect of the original notice you must immediately contact the Operational Advisory Team. Civil enforcement proceedings will cease as the employer will have a further 28 day appeal period in respect of the replacement notice. If after this period the employer has not appealed the notice and the arrears to the workers have not been paid the NMW Officer should notify Operational Advisory Team who will consider taking enforcement action in respect of the replacement notice.