After notice of underpayment issued: change of trading position of business after a notice of underpayment is issued
Where arrears are outstanding following the issue of a Notice of Underpayment and the trading position of the business has changed the next action taken regarding enforcement will depend on the particular circumstances.
Ceased to trade
If the business has ceased to trade but still exists as a legal entity then it is expected that enforcement of the arrears will continue, as there may be assets of the business available to be realised and payment of arrears may still be secured. In this situation the case should be submitted to the NMW Technical Team to consider instructing the relevant Solicitor’s Office to make a claim for the arrears to the County Court (Sheriff’s Court in Scotland) under section 19D NMW Act 1998. Solicitor’s Office will then continue to pursue payment of the arrears to workers.
Liquidation, insolvency or struck off
If it is suggested that the business has entered into some form of insolvency, bankruptcy, liquidation, administration or has been struck off the Companies House Register of Companies (limited companies and limited liability partnerships only) it is necessary to obtain the full details of the arrangement including the identify of the party managing the arrangement.
Where the business is a limited company it is appropriate to check the status of the company at Companies House website. If this indicates the company is not struck off then enforcement action should continue. If Companies House indicates that the company is in the process of being struck off then action should immediately be taken to prevent this from happening using normal procedures. This action should be repeated every 6 months.
The full details of the change of trading position should be sent to Operational Advisory Team who will consider and liaise with solicitors as appropriate. The details should include
- Verification that the change has occurred, such as verification from Companies House Register or by contacting HMRC Insolvency Handling Unit (ICHU)who receive notifications of all liquidations through the London, Edinburgh and Belfast Gazette
- Details where possible of the Official Receiver or Insolvency Practitioner acting for the employer.
If the Operational Advisory Team advise that no further enforcement action is possible the NMW Officer should send a copy of the Notice of Underpayment and arrears schedule to the Official Receiver/Insolvency Practitioner, together with a covering letter explaining that the workers included on the notice are due the arrears of pay as shown on the notice. The workers should be informed that such a letter has been sent and that they need to make their own claim in the liquidation for those arrears as we are unable to continue with enforcement action due to the employer’s insolvency.
Where a national minimum wage penalty is outstanding, the NMW Officer must notify HM Revenue & Customs Debt Management & Banking (DMB) of the liquidation in accordance with the latest operational guidance. HM Revenue & Customs Debt Management & Banking (DMB) will then pursue the penalty via the appointed Liquidator/Official Receiver.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Sold or changed hands
If the business has been sold or has changed hands the NMW Officer should obtain as much detail as possible about the sale/change in ownership of the business and the current status of the business, including whether there has been a transfer of workers under the Transfer of Undertakings Protection of Employment (TUPE) Regulations 2006. The effect of the TUPE regulations can determine which legal entity HM Revenue & Customs will pursue for any NMW arrears owing. Once the relevant information has been obtained you should refer the case to the Operational Advisory Team, who will consider the facts and advise how the case should be progressed.