Prior to 2017 it was generally accepted practice in the social care sector to pay fixed rates (usually c. £25-30 per shift of c. 8 hours) for overnight sleep-in shifts, together with hourly rates for time actually awake and working.
At a time when social care couldn’t have it any worse, a case earlier this year confirmed that the National Minimum Wage (NMW) rates may apply for each and every hour of those sleep-in shifts, regardless of whether or not the care worker was called upon to work.
Understandably for clients in the care sector, often charities and/or publicly funded giving essential care to those who need it most, this ruling dealt a potentially fatal blow. Some organisations have been left reeling at not only the increased payroll costs hitherto not factored into funding arrangements but also the more worrisome issue of back pay claims being made by care workers together with HMRC enforcement and severe penalties for failures to pay the applicable NMW rates.
Where are we now?
In employment law terms the key is to determine whether the individual is ‘working’ even though they may be asleep. Facts that would likely lead to a conclusion that NMW rates apply include:-
1. The purpose / reason for the worker being there: for example, if this is for compliance reasons i.e. they cannot leave site and must be there at all times.
2. Where they have significant responsibility while on a sleep-in shift.
3. What does the contract say: does the contract specify what rates for what shifts, does it separate the sleep-in rates and why?
In the recent Mencap case for example, the worker was:-
– required to be present and listen;
– needed on site for compliance / regulatory purposes; and
– unable to leave site at all.
So, at present, most sleep-in shifts where workers are there for compliance reasons, and are responsible for care whether asleep or not, are likely to attract NMW rates for each hour of that shift.
In principle, this then exposes the social care sector to HMRC enforcement and penalties. There has, however, been some assistance in the form of the following measures by the government: –
1. Suspension of HMRC enforcement action for underpaid sleep – in shifts by social care providers up to 2.10.17;
2. Waiver of penalties for underpayments that took place prior to 26.7.17;
3. A new scheme, to allow time for assessment of liabilities for underpayment and then payment, for employers to opt-into now, providing time up to December 2018 to assess and make payments – we are presently reviewing this with clients.
Also, some aspects of some of the offending cases are being appealed – just to make things even clearer!
What should a care sector employer do now?
Frankly, a significant number of social care providers cannot foot the bill for underpayment claims that could be made and can’t even afford the ongoing increases although many are taking steps to increase night rates if the facts apply to their workers. However, all employers in this sector must now urgently: –
1. Assess the extent of the liability for underpayment claims and contractual obligations too, contracts may also require amendment;
2. Seek to ‘draw a line’ for limitation and compliance purposes by setting up compliant pay systems from hereon if they haven’t done so already – that does not necessarily mean paying full NMW rates for each hour on sleep-in, depending on the rates and hours that are worked at other times. Again, this requires careful assessment;
3. Take advice on the new HMRC scheme and the pros and cons of it and consider opting in to avoid penalties and enforcement action.
4. Consider lobbying your LA for an increase in rates (perhaps pursuant to the Care Act) and it’s obligations to ensure care staff are remunerated in compliance with the NMW.
If you do need help, we’re happy to take initial queries free of charge as we know this is an extremely difficult situation that – if ignored – could put some organisations at serious risk of failing.
Lee Stephens, Solicitor, Head of the Bridge Employment Law Team, 01904 360 295