A new compliance scheme has been launched for social care providers that may have incorrectly paid workers below the minimum wage hourly rate for full shifts to staff who sleep over. The scheme runs from 1 November 2017 to 31 March 2019.

The measure is a long-awaited attempt by the government to redress a problem partly of its own making after it provided misleading advice to the care sector on what should be paid where a care worker stays overnight with a patient.

Social care employers are being offered the chance to join the Social Care Compliance Scheme (SCCS), which gives them 12 months to identify what they may owe to workers in back pay. Where arrears are identified at the end of the self review, employers will have up to a further 3 months to pay the workers (making 15 months in total for the whole exercise).

The scheme is designed to help ensure workers are paid what they are owed, while also ensuring the care sector can remain in business.

HM Revenue & Customs (HMRC) is writing to social care employers who have allegedly not paid at least the minimum wage rate for sleep-in shifts, to encourage them to sign up to the scheme. Employers that choose not to opt into the scheme will be subject to HMRC’s usual enforcement approach, which is probably all the encouragement they need to sign up.

Penalties waived

Earlier this year the government waived penalties for sleep-in shift underpayments arising before 26 July 2017. This was in response to concerns over the combined impact which financial penalties and arrears of wages could have on the stability and long-term viability of social care providers.

Enforcement action for sleep-in shifts in the social care sector was temporarily suspended between 26 July and 1 November 2017.

How we got here

Under National Minimum Wage (NMW) regulations, sleep-in shifts can count as work for which NMW is payable. However, due to government guidance, many social care providers paid a flat rate below the NMW rate for such shifts, meaning arrears built up.

Government guidance was updated following case law, but for a period before February 2015 was misleading on this issue.

Working of the scheme

The SCCS is an interim enforcement scheme designed to facilitate a solution to the issue of NMW underpayment for sleep-in shifts in the social care sector.

HMRC will retain discretion over the operation of the SCCS on a case-by-case basis, including which providers will be permitted to enter the scheme and whether any providers should later be removed and subject to normal enforcement processes. HMRC will also take steps to check that employers are making adequate progress during the course of their self-review, and will have discretion to deal appropriately with any exceptional circumstances.

HMRC is issuing a separate employer information pack, and will provide further guidance as necessary.

The scheme will end on 31 March 2019, by which time all providers must have shown that they have repaid their arrears relating to sleeping time.

Nothing in the scheme prevents individual workers taking their own legal action (whether in the Employment Tribunal or Court) to recover arrears owing to them.

Reaction to the scheme

The Times reports that social care for vulnerable adults is at risk of collapse in parts of England as charities are forced to pay much higher wages to some overnight staff. Providers of care in the community for adults with learning disabilities are having to withdraw from services because they face having to pay arrears to care staff of up to £74m.

The paper reports that this bill could rise to around £200m a year by 2020 if charities were to pay staff the National Living Wage for every sleep-in shift, leading to staff reductions and even ending sleep-in shifts altogether in some cases. In addition, The Times reports that there is another £400m in pay arrears owed by providers of adult social care.

Providers of care for younger adults who live at home or in houses supported by several staff have told The Times that around half of all local authorities have refused to raise their rates to reflect higher staff costs, resulting in some providers suspending any bidding for new contracts.

The paper says the new SCCS has caused anger amongst care providers in that even though they have now been given 15 months to calculate and pay any arrears owed to staff, the government is providing no more money.

If you would like to discuss the issues raised in this article, please contact a member of our Care Homes team.


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