New NMW enforcement approach for sleep in shifts

Government research highlighted sleep in shifts as a major cause of National Minimum Wage breaches in the social care sector. HMRC research has found that historically many social care workers have not been paid for hours where they must sleep away from home to look after a client.

The sum of potential liabilities owed by HMRC is so large that concerns were raised that it would seriously damage the social care sector with many companies being forced to close because of the cost of repayment plus HMRC penalties.

To try and ensure that workers are paid what they are legally owed without seriously harming the social care sector HMRC have introduced the following interim approach.

• Social care employers at risk of NMW underpayments will be offered the option to join the Social Care Compliance Scheme (SCCS), if the company meets minimum criteria and subject to HMRC’s discretion.

See our earlier article on the SCCS here.

• Every Social Care company that has been subject to a complaint about NMW will be contacted by HMRC to join the SCCS scheme. However, employers will be able to self-select into the SCCS where applicable.
•  If an employer opts into the SCCS they must conduct a self-review within 12 months to identify any cases where NMW has been breached. The employer must repay the liability owed to the worker within 3 months of the end of the self-correction period.
•  If all NMW liabilities are paid within the SCCS timescales, the employer will not be subject to additional penalties and will avoid being ‘named and shamed.’
• Regardless of when an employer enters SCSS the absolute deadline for repaying arrears to workers is 31st March 2019.
• Employers who do not opt into the SCCS process will be subject to HMRCs full powers including financial penalties and ‘naming and shaming.’

See the Government announcement here.

Aspire Comment

It is hugely important for any employer in the social sector to review their payments of NMW, especially for sleep in shifts, to identify if any breach has occurred.

Government is aware that clarification of the NMW position for sleep-ins has led to many social care providers owing arrears to their employees, a situation which could potentially de-stabilise the social care industry.  It is against this background that the SCCS, described as “a proportionate, time-limited, sector-specific approach which recognises the importance of continued care for vulnerable individuals whilst securing arrears of pay for care workers working sleep-in shifts” has been implemented. 

The introduction of the SCCS effectively introduces an amnesty from penalties and naming and shaming and, whilst it will not absolve the liability for payment of arrears, it will be a valuable tool as penalties, at up to 200% of the arrears due, capped at £20,000 per worker, can be financially catastrophic for a company.  We would anticipate that HMRC will target the care sector further in an attempt to ensure compliance going forward.

NMW legislation is complicated and so, can be difficult to understand.  Aspire can identify any breaches in NMW and liaise with HMRC accordingly. Contact us if you would like us to conduct a NMW review for your company.