On 1 November 2017 the Government issued its promised update regarding its policy on enforcement of the National Minimum Wage around the area of ‘sleep-in’ shifts that affects some operators within the care sector.
The issue of backdated payments for employees of care providers carrying out sleep-in care shifts arose following employment tribunals, most recently in May, which ruled that workers were entitled to the national minimum wage for sleep-in hours, rather than a fixed rate.
Following the tribunal, the government announced it would temporarily waive historic fines for providers found not to have paid staff the minimum wages for sleep-in shifts up to 26 July 2017.
It also suspended HMRC from enforcing back pay until it worked out what impact it could have on the stability of social care and this suspension was extended to the end of October.
From 1 November 2017 the government has announced that social care employers presenting risks of National Minimum Wage underpayment for sleep-in shifts will be offered (subject to HMRC discretion and meeting a minimum criteria) the opportunity to opt in to the Social Care Compliance Scheme (SCCS). The SCCS which can be opted into voluntarily, will require operators to conduct a thorough self review in order to identify and repay any wage arrears to workers.
In return, providers will normally be offered a period of twelve months in which to carry out this review, and then up to three months to pay all arrears. Providing all arrears are paid within the required timescale, employers will not be subject to financial penalties and will not be eligible for naming. The deadline for repaying arrears to workers will not be later than 31 March 2019, regardless of when the employer enters the SCCS.
Employers who decide not to opt-in will not be offered any further concessions and will be subject to the full HMRC investigative process, including financial penalties, which can be severe including public naming and possible prosecution. It should be noted that financial penalties would only relate to sleeping time arrears after 26 July 2017.
Yesterday’s announcement does not confirm the period over which the self-review is expected to be carried out – although six years has been suggested, this has not been confirmed.
The announcement is light on detail in relation to the funding of wage arrears. It states that discussions with the European Commission have been opened and there is a recognition of the pressures that liabilities are placing on providers. That being said, this latest announcement is unlikely to ease the anxiety that some operators are facing around this area.
We urge operators to think carefully about whether to instigate a self-review and opt into the SCCS. There are still many questions to be answered, and we strongly suggest that you take some specialist legal advice around this area before making any decisions.