Veitch Penny LLP - Exeter | Crediton, Devon

Case

Inland Revenue Wales and Midlands v Bebb Travel plc Court of Appeal - (16 April 2003)

Issues

(1) National minimum wage
(2) Enforcement
(3) Pay Reference Periods - National Minimum Wage Act 1998

Facts

The National Minimum Wage Act 1998 requires employers to pay employees at least the national minimum wage rate for the hours worked in each pay reference period.

In this case, the Respondent was a coach service operator. Its employee’s actual hourly rate of remuneration was below the appropriate hourly rate under the national minimum wage. In May 2000, the Respondent dismissed all its stewards and stewardesses. They all received the correct redundancy payment according to their rights.

In September 2000, the Complainant visited the Respondent’s offices and examined its wage records. The Respondent was then served with an enforcement notice under the National Minimum Wage Act 1998. The notice related to the now redundant workers. It required the Respondent to pay each of the workers the difference between the minimum wage and the pay they had received.

The Respondent exercised its right of appeal and sought an order that the notice be rescinded. This was on the basis that the notice was invalid, as it did not relate to any reference period for present workers ending on or after the date of service of the notice. It purely related to past pay periods in respect of past workers.

Section 19(1) of the Act allowed the Complainant to: ‘… serve [an enforcement notice] on the employer requiring the employer to remunerate the worker for pay reference periods ending on or after the date of the notice at a rate equal to the minimum wage.’ Section 19(2) then stated ‘… an enforcement notice may also require the employer to pay the worker … in respect of the employer’s previous failure to remunerate the worker …’

The employment tribunal allowed the Respondent’s appeal and rescinded the notice on the basis that an enforcement notice could only be served in respect of existing workers.

The Complainant’s appeal to the Employment Appeal Tribunal was dismissed, and consequently, the Complainant appealed against that decision on the grounds that (a) section 19 (1) of the Act could be interpreted to refer to workers who had ceased to be employed, and (b) that section 19(2) was not dependent on the power to issue an enforcement notice granted under section 19(1).

Decision

The appeal would be dismissed.

The original decision was correct. A valid enforcement notice could only relate to present workers in respect of present and future wages by virtue of section 19(1), and also, if appropriate, their past wages under section 19(2). It was held that the legislation could only relate to present workers and could not be made to apply to past workers. Section 19(2) was dependent on section 19(1). There was therefore no power to issue an enforcement notice in respect of past workers for past pay. In those circumstances, the tribunal’s view had been correct and it had been entitled to rescind the enforcement notice.

Comments

The decision does raise an issue where an employer who becomes aware of the Inland Revenue’s intention to serve an enforcement notice might dismiss the affected employees before the notice is served. However, the Appeal Tribunal did note that the employee could still bring a claim against the employer in the employment tribunal or county court. In any event, there is currently a Bill before Parliament which will introduce an amendment to section 19, thereby dealing with the irregularity.

Peter Taylor