HMRC is currently investigating social care providers for underpayment of the National Minimum Wage (NMW) in respect of sleep-in shifts carried out by care workers.
The NMW is the legal minimum that employers must pay workers in the UK. Workers aged 25 and over are entitled to the National Living Wage which is currently paid at a rate of £7.50 per hour.
It is the responsibility of employers to pay the correct minimum wage to staff and HMRC takes enforcement action against those who don’t.
In recognising the difficulties posed to the social care sector by the cumulative financial liability for penalties and arrears of wages, namely that providers may not be able to meet their obligations to pay their workers if enforcement action is taken by HMRC, the government has proposed:
- Financial penalties faced by employers found to have underpaid workers for sleep-in shifts will be waived in respect of arrears of pay resulting from shifts that took place before 26 July 2017. Employers found to have underpaid their staff after that date will face financial penalties in the usual way.
- To temporarily suspend HMRC enforcement activity in respect of sleep-in shifts until 2 October 2017. This will apply to HMRC investigations where there may be an underpayment in respect of such shifts and applies to employers in the social care sector only.
The stability of the social care sector is a key government priority. The government’s proposal recognises this. However, the waiver only applies to financial penalties issued by HMRC resulting from sleep-in shifts that took place before 26 July 2017. The government has stated that any employer underpaying their staff for these shifts in the future will be liable to pay financial penalties, in the usual way, of 200% of the arrears found.
The government will work with representatives of the social care sector, during the period of suspension of HMRC enforcement activity, to explore ways to minimise any impact on the provision of social care as a result of the situation.
For further information on national minimum wage issues please contact your usual contact in the Devonshires Employment and Pensions Team.