Enforcement action against care charities suspended for another month

It is estimated that care charities owe as much as £400m in back pay to sleep-in care workers because of a change to government guidance

Mencap work: charity fears it will have to close care homes and lay staff off
Mencap work: charity fears it will have to close care homes and lay staff off

The government has announced a further month’s suspension of enforcement action against care charities relating to an estimated £400m back-pay bill for sleep-in care workers.

The announcement, made yesterday, was met with disappointment from disability groups, which are worried that paying back pay to sleep-in care workers, who are widely used in the sector to provide care for vulnerable adults, could cause huge financial difficulties for many such charities.

Sleep-in care workers are typically paid a flat rate of £35 to £45, with workers receiving either the national minimum wage or the national living wage for the hours they spend providing care, according to the Voluntary Organisations Disability Group, which represents charities that provide services to disabled people.

But in the wake of two employment tribunal decisions made last year, the Department for Business, Energy & Industrial Strategy changed its guidance to ensure that the national minimum wage applied to sleep-in carers.

Earlier this year, HM Revenue & Customs began taking enforcement action against some disability charities over six years of back pay owed to affected staff, which is estimated to be worth up to £400m across the sector.

But the BEIS later said employers that had underpaid workers for sleep-in shifts before 26 July 2017 would have historical financial penalties waived and HMRC would suspend its enforcement activity until 2 October.

This enforcement activity has now been suspended for another month, with the government due to outline a new approach to solving the back-pay crisis in the next few weeks, a statement from the Department of Health, HMRC and BEIS said.

Derek Lewis, chair of Mencap, said the government’s failure to resolve the back-pay issue was "deeply disappointing", especially because the liability facing charities like Mencap was the result of following government guidance.

Mencap estimates that it would owe £20m in back pay if the government does not provide funding, which it says could lead to the closure of 200 residential care homes and services run by the charity and to as many as 4,000 redundancies.

"It remains essential that the sector receives full funding for this liability to avoid unacceptable harm to people with learning disabilities and insolvencies among providers," Lewis said.

"Ensuring the proper care for those with disabilities and funding the cost of it remains a statutory responsibility of government, including the cost of this U-turn in the government’s interpretation of its own rules.

"We will work constructively with government during the next month to deepen its understanding and appreciation of the impact of back-pay bills on the sector, but the future of learning disability care across the UK is still hanging in the balance." 

Rhidian Hughes, chief executive of the VODG, said the social care sector was "reaching a critical junction on future funding and service arrangements".

He said: "Government must develop a robust strategy for social care, and that includes a fair funding solution for sleep-in cover in the future. There is a risk of good providers further exiting from the market because they will not compromise on delivering high-quality services."

Steve Scown, chair of the VODG, said: "The decision to pause is worrying. For each month that goes by providers are continuing to work with a potential unknown back-pay bill with no clear indication about future funding arrangements.

"We call on government to step up the pace. We need a common-sense, pragmatic solution that enables colleagues to be paid their dues without employers being made bankrupt."

Martin Green, chief executive of Care England, a representative body for independent adult social care providers, said there was "a lot of uncertainty" in the sector and called on the government to urgently provide greater clarity on how the back-pay issue would be resolved.

A government spokesman said: "We recognise the vital role social care providers play in supporting some of the most vulnerable people in our society and equally that social workers should be paid fairly for the important work they do.

"This suspension will help to minimise disruption to the sector as we seek to ensure workers receive the wages they are owed while we establish whether the industry needs any further support."

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