Demands by the government that learning disability charities pay up to £400m in back pay after changes in government guidance on wages for "sleep-in" carers might be unlawful, a lawyer has warned.
According to the learning disability charity 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 tribunals decisions from last year, the Department for Business, Energy and Industrial Strategy has changed its guidance to ensure the national minimum wage applies to sleep-in carers.
The new guidance will be considered by the Court of Appeal in March, according to Mencap, and HM Revenue & Customs has begun demanding that learning disability charities provide six years of back pay for sleep-in carers.
Mencap has warned that the changes could cost the learning disability sector between £160m and £400m, and said it would have a major impact on the 5,500 people who rely on support from the charity.
But Matt Wort, a partner at Anthony Collins Solicitors, said he believed HMRC’s actions could be unlawful, especially because its internal guidance from last year said workers should be paid while sleeping only in "exceptional" circumstances.
Wort said: "The sheer inconsistency of guidelines provided by HMRC in relation to sleep-in care has caused massive disruption and worry to many charities and social care providers.
"Freedom of information requests show that, as recently as February last year, HMRC inspectors were given internal documents suggesting workers should not be paid the minimum wage while asleep other than in exceptional circumstances. We consider it is unlawful for HMRC to now threaten to seek up to six years’ back payment.
"Sleep-ins for vulnerable groups are no longer financially viable. An alternative solution must be sought now."
Mencap said the reforms could bring the sector "to the brink of disaster" and compared the situation to the collapse of the Southern Cross care home firm earlier this decade.
Derek Lewis, chairman of Mencap, said: "HMRC enforcement action needs to be stopped immediately until the law is clarified and a definitive decision is made on back pay.
"It is time for government to give a public undertaking to fund back pay should the Court of Appeal uphold the tribunal decision.
"High politics, Brexit and the parliamentary recess must not be allowed to get in the way. The future of some of the most vulnerable in our society needs to be protected."
The VODG, which represents charities that provide services to disabled people, has backed Mencap’s comments.
Rhidian Hughes, chief executive of the VODG, said: "Like our colleagues across the sector, we have welcomed the national living wage and have fully supported its implementation. However, the sector is now approaching a crunch over sleep-ins and we urgently require government to clarify its position."
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 workers in that sector should be paid fairly for the important job they do.
"The government is considering this issue extremely carefully and ministers continue to meet with care providers to ensure any action taken to protect workers is fair and proportionate."