Following a recent key judgement on payment for sleep-in shifts (LELR 525), the government has launched a scheme to ensure that social care providers now pay workers what they are owed.

Under National Minimum Wage (NMW) regulations, sleep-in shifts can count as work for which NMW is payable. However, historically many providers paid a flat rate which was below the NMW. The result is that those providers are now liable to pay (often substantial) sleeping time arrears.

Following an assessment of the risks posed to the social care sector as a consequence of these liabilities, the government has now launched the Social Care Compliance Scheme (SCCS). Social care employers who have incorrectly paid workers below the legal minimum wage hourly rates for sleep-in shifts can opt into the scheme, giving them up to a year to identify what they owe to workers.

In instances where a worker complaint has been received, social care employers will be contacted directly by HMRC regarding the scheme, although they can also self-select where applicable. The SCCS scheme will require providers to conduct a thorough self-review in order to identify and then to repay any wage arrears to workers.

In return, providers will normally be offered a period of twelve months in which to conduct the self-review with access to HMRC technical support, and then up to three months to pay all arrears. Providing all arrears are paid within the SCCS timescales, these employers will not be subject to financial penalties or public naming.

Regardless of when an employer enters the SCCS, the deadline for repaying arrears to workers will not be later than 31 March 2019. Employers who decide not to opt-into the scheme will not be offered any further concessions and will be subject to the full HMRC investigative process – including financial penalties, public naming and possible prosecution where appropriate.

Iain Birrell of Thompsons Solicitors commented: “Sadly this is not the positive move it seems. The problem arose in part because as late as February 2016, HMRC was issuing guidance to its own staff that stated care workers were not entitled to the national minimum wage while asleep, other than in exceptional circumstances. Care providers followed that advice and will understandably fail to see why they should be at risk of censure for following official advice.

The crisis which now exists is exacerbated by the very tight financial margins in the industry, often as a result of the government’s own budget restrictions when awarding local authority contracts. There is little guidance for care providers as to how to calculate their own indebtedness, but the scheme builds-in an incentive for them to minimise it as much as possible.

Once again those who lose out are the workers themselves who have to wait for wages they are owed, and hoping that their employer doesn’t go bust in the meantime. The National Minimum Wage Act has been around since 1998 and this debacle is nothing short of scandalous.”

Click here to read the government scheme in more detail.