Government suspends back-pay action against social care charities

It has waived financial penalties and temporarily halted HMRC from pursuing charities over back pay for sleep-in care workers

HMRC
HMRC

The government has waived financial penalties and temporarily prevented HM Revenue & Customs from pursuing social care charities over the historical payment of the national minimum wage to sleep-in care workers.

A statement from the Department for Business, Energy & Industrial Strategy said that the government would waive historical financial penalties against social care providers and temporarily suspend enforcement activity because of fears about the long-term viability of those organisations.

The government has worked closely with the sector in response to concerns over the combined impact which financial penalties and arrears of wages could have on the stability and long-term viability of providers

But the learning disability charity Mencap has today criticised the government for not committing to paying as much as £400m the sector might owe in six years’ worth of back pay, which the charity said could lead to the collapse of a number of major care providers.

According to Mencap, sleep-ins are used widely in the learning disability sector to provide care for vulnerable adults, and until recently workers were paid a flat-rate, "on-call" allowance rather than the national minimum wage.

The flat rate is typically £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 from last year, the BEIS has changed its guidance to ensure the national minimum wage applies to sleep-in carers.

As a result, HM Revenue & Customs began asking disability charities to give six years of back pay to affected staff. Mencap said this could cost the sector as much as £400m, and some legal experts have questioned whether HMRC’s action was lawful.

But today’s announcement means employers that underpaid workers for sleep-in shifts before 26 July 2017 will have historical financial penalties waived and HMRC will suspend its enforcement activity about sleep-in care shifts until 2 October 2017.

The BEIS statement said: "The government will continue to look at this issue extremely carefully alongside industry representatives to see whether any further support is needed and ensure that action taken to protect workers is fair and proportionate, while seeing how it might be possible to minimise any impact on social care provision."

Derek Lewis, chairman of Mencap, welcomed the government’s decision, but said it did not address "the catastrophic impact on providers, people with learning disabilities and care workers of the £400m back-pay bill across the sector".

He said: "Employers are keen to fulfil their responsibilities to employees. But if the government changes the rules on how sleep-in payments should be paid, it must expect to have to pay for the changes.

"We reiterate our call to government to accept its responsibility and make an urgent commitment to fund the back-pay bill, for the sake of those vulnerable people who depend on this care and for the dedicated people who provide that care. Time is running out."

Rhidian Hughes, chief executive of the VODG, said: "The announcement by government is very welcome, timely and a significant step forward. We will continue to work with central and local government and employers to reach agreement on the future funding of essential services for disabled and older people who require on-call support during the night.

"But there is much more detail to work through. We need to agree a solution that works for the sector and avoids significant litigation. This includes removing the risk of back-pay claims against employers."

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