Blog: Partial reprieve for social care providers over NMW underpayments

Kate Wyatt

Kate Wyatt

Despite a partial reprieve, employers in the social care sector must take swift action to comply with rules on paying workers appropriately for sleep-in shifts, writes Kate Wyatt

The government has recognised the difficulties the social care sector is experiencing as a result of recent rulings on underpayment of the National Minimum Wage (NMW) for sleep-in shifts.

The Employment Appeal Tribunal recently held that workers were entitled to be paid the NMW (rather than by a flat rate payment) for the whole period of a sleep-in shift, including time spent sleeping. However, this right is also dependent on particular factors related to the worker’s obligations during that shift.

Flat rate payments have been common practice for sleep-in shifts. As a result of the Roberts decision many employers in this sector have potentially been underpaying sleep-in workers and may face substantial claims for arrears and penalties by HMRC. With likely underpayments per worker per night in the order of £35, and government penalties which could be twice that, the consequences for the sector may be devastating.

On 26 July 2017 the Department for Business, Energy and Industrial Strategy (BEIS) confirmed that employers are required to pay the NMW correctly. Action will be taken by HMRC against those who do not comply.

Given the potential impact that cumulative liabilities for arrears of wages and additional penalties may have on the stability of the sector (potentially resulting in underpaid workers not receiving payments owed) the following direction has been issued:

the Government will waive financial penalties for employers who are found to have underpaid workers for sleep-in shifts for the period before 26 July 2017. Arrears of pay will continue to be payable to underpaid workers;
enforcement action in relation to sleep-in shifts in the social care sector will be temporarily suspended until 2 October 2017.

Although this announcement is welcome, employers in the social care sector must take swift action to ensure their practices on payment for sleep-in shifts are in order, applying the multifactorial approach set out in Roberts. It’s also vital to consult and correctly follow government guidance on payment of the NMW. Contracts of employment must be clear on the duties workers have during sleep-in shifts – and this should be reflected in practice.

Social care employers unclear on whether they are paying the appropriate NMW for sleep-in shifts should seek urgent advice.

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