Background
Earlier this year the Employment Appeal Tribunal (EAT) held that care providers had to pay their staff minimum wage for sleep-in shifts. Following a media campaign led by Mencap who, along with care providers big and small, were concerned about the affordability of this, the government waived financial penalties for social care employers who failed to pay their staff minimum wage for sleep-in shifts before 26 July 2017.
The government promised more guidance and plans would follow as care providers warned that paying minimum wage to staff for sleep-ins could force many of them out of business.
Social Care Compliance Scheme
Last week, the government announced the SCCS. While a temporary reprieve, in the long term the scheme does little answer the fears of care providers, service users and their families.
Under the new scheme, employers can sign up with HMRC to get help over the next year to identify what they owe their workers for sleep-in shifts. At the end of the review period, employers will have three months to pay up. As a trade off, employers will be sparred potential fines for failing to pay minimum wage (up to 200% of the unpaid wages, capped at £20k per worker) and will not be ‘named and shamed’ by HMRC for failing to pay minimum wage.
Employers can either contact HMRC to sign themselves up or in some circumstances HMRC will contact them first. Employers who have already been prosecuted for failure to pay minimum wage are not eligible for the scheme, and those who have declined an invitation from HMRC then you cannot join at a later date.
To sign up or not?
The main advantage of signing up now is that the employer avoids any fines for a failure to pay the minimum wage and avoids being ‘named and shamed’.
But by signing up now the employer may be acting too soon. Mencap is appealing the EAT ruling to the court of appeal, expected to be heard in March 2018, the outcome of which could change the position as to whether sleep-in carers are entitled to the minimum wage. By signing up to the scheme employers could implicitly be accepting that they have underpaid staff, from which it will be difficult to back-track if the appeal goes in Mencap’s favour.
Providers should approach their local authority to see if they will provide extra funding. Local authorities have a duty under the Care Act to promote an efficient and effective market in care services, including that remuneration paid to staff of providers must comply with the minimum wage. Any refusal to pay more could be open to challenge by way of judicial review.
Funding
Mencap has estimated that the total cost to the sector will be in the region of £400m, representing unpaid wages going back six years.
The SCCS and the accompanying announcement do not address the concerns about funding at all. The government says that is in ongoing discussions regarding providing financial support to care providers, but it is not clear how long these discussions will take or what their outcome will be.
In the longer term, the question for many providers will be whether they can still afford to provide care services while paying their staff minimum wage for sleep-ins. With already increasing care costs likely to further increase with an ageing population, the problem of how we afford care is going to become more and more pressing.
