Veitch Penny LLP - Exeter | Crediton, Devon

Case

St Hermans Estate Co. Ltd v Commissioners of Inland Revenue

Issues

(1) Pay and benefits
(2) Minimum wage
(3) Steps to be taken despite unsatisfactory evidence - National Minimum Wage Act 1998 Section 19

Facts

An employee of the applicant was paid for unspecified hours and no records were kept of the time she worked despite the obligations of the National Minimum Wage Act 1998.

Subsequently a compliance officer had to consider whether the employee had been paid the national minimum wage. He served a notice of enforcement requiring the applicant for pay £4,925.90 to the employee. The employment tribunal took the view that the evidence from both the applicant and the employee was so unsatisfactory that it was unsafe to draw any conclusion as to what sums were owing. Accordingly it struck out the enforcement notice. The Respondent appealed.

Decision

In considering whether the employment tribunal had erred in striking out the enforcement notice the tribunal held that an employer could appeal against an enforcement notice if it could show that the sums specified in the notice was incorrect.

In this case the applicant employer had successfully established that the figure was incorrect, but the employment tribunal had then erred by failing to proceed with its duty under section 19 (8) (a) to rectify the enforcement notice and it ought to have assessed the true amount as best as it could despite the unsatisfactory nature of the evidence.

It was not up to the tribunal to decide that the task of assessment was so difficult that the employment tribunal could simply award no payment at all. The decision of the tribunal to strike out the enforcement notice was therefore an error in law.

Comments

This shows that tribunals do have power to correct the amount of the enforcement notice if a mistake has been made and employers would therefore be well advised to consider settlement of any outstanding amount to avoid unnecessary costs in contesting this should it be clearly established that they have acted in breach of the minimum wage provisions.