Paying sleep-in staff – HMRC’s Social Care Compliance Scheme – Care Home Professional

As most people in the sector know, HMRC has been seeking to force care homes to make back-payments to sleep-in workers; those who have been paid a flat rate for night shifts rather than the hourly National Minimum Wage. This followed two Employment Appeal Tribunal cases in 2016 (Focus Care Agency Ltd v Roberts and Frudd v The Partington Group Ltd and Mencap v Tomlinson-Blake).

HMRC’s Social Care Compliance Scheme

On 1 November, The Department for Business, Energy & Industrial Strategy (BEIS) announced a Government scheme to assist providers in the sector in dealing with these historical liabilities. The Government has introduced the Social Care Compliance Scheme (SCCS) which providers may apply to HMRC to opt-in to. Once in the scheme, providers will be required:

  • to conduct a self-review in order to identify any wage arrears; and
  • to repay any wage arrears to workers by 31 March 2019.

Providers will be permitted up to 12 months to carry out their internal review and HMRC have offered to provide technical support to individual providers who request it. All payments of arrears must be made by 31 March 2019, regardless of when the provider enters the scheme. So, late entrants may have less than the 12 months to carry out their self-review.

HMRC’s ‘carrot’ is the SCCS, giving providers time to look into the issue internally and time to pay arrears. However, providers will want to avoid HMRC’s ‘stick’; those not opting-in to the SCCS will be subject to the full HMRC investigative process. This includes being subject to financial penalties (up to £20,000 per employee), public naming and potential prosecution for the most serious cases.

It is expected that the vast majority of providers affected will apply to join the scheme. Full details of the scheme can be found here: https://www.gov.uk/guidance/tell-hmrc-if-youve-underpaid-national-minimum-wage-in-the-social-care-sector .

The National Minimum Wage Regulations 2015 provide the legal basis for payments and BEIS has published guidance on the issue, National Minimum Wage and National Living Wage: Calculating the Minimum Wage (link here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/605397/nmw-nlw-calculating-minimum-wage-guidance.pdf ). Applying the regulations and the guidance is not straight-forward so any providers needing support should contact HMRC or seek legal advice.

Also, it is worth noting that the Care Quality Commission (CQC) continues to take an interest through its Market Oversight team. CQC’s board commented at their most recent meeting, on 15 November 2017, that this issue “presents material financial risks to a number of providers”.

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