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NMWM13060 | Issuing Notices of Underpayment: who is liable to pay the arrears and the penalty on a notice

From HM Revenue & Customs · National Minimum Wage Manual

Relevant legislation

The legislation that applies to this page is as follows:

  • National Minimum Wage Act 1998, sections 17 and 48

  • Employment Rights Act 2025, sections 103, 108 and 109

  • Partnership Act 1890

General

A worker’s employer is issued with the Notice of Underpayment and is liable to pay:

  • the arrears to the workers named on the notice and

  • the penalty to HM Revenue & Customs.

It is important to identify the liable employer so that they can be correctly named on the Notice of Underpayment and it can be correctly addressed (NMWM13080), (NMWM13090). (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Two or more employers or individuals jointly liable

Two or more employers or individuals may be jointly liable to pay National Minimum Wage arrears and penalties. This may happen where:

  • there is more than one partner in a business (NMWM13180);

  • a superior employer is deemed to be the worker’s employer jointly with the worker’s immediate employer (NMWM05130).

In these circumstances, each partner and/or employer must be informed about:

  • their liability to pay the amounts shown on the Notice of Underpayment (NMWM13260),

  • any subsequent payments which reduce the arrears and/or the penalty due, and

  • if payments are made, any outstanding amounts that they are then still liable to pay.

Changes to a partnership or superior employer

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Change of legal status of a business

If the legal status of a business has changed (for example it is sold, transferred to another owner, merges or is taken over by another business) either:

  • since the investigation started, or

  • at any time during the period of arrears owed to one or more workers,

full details of the circumstances should be obtained, including whether or not those workers who are the subject of your investigation continued to be employed by the new owner up to and beyond the point of sale or transfer.

In these circumstances, we must consider if the Transfer of Undertakings (Protection of Employment) (TUPE) provisions apply and the new owner employing the worker(s) will be liable to pay the arrears and the penalty for either:

  • different individual workers, and/or

  • the same worker, but for different periods.

Please see Operational guidance regarding considering TUPE. If TUPE applies the new owner of the business will be responsible for National Minimum Wage arrears which arose whilst the worker was employed by the former owner of the business. Any penalty attached to arrears transferred in this way will also transfer to the new owner who takes over the business.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)