The question of to what extent workers should be paid the National Minimum/Living Wage (NMW) for sleep-in shifts has been a source of some uncertainty for a while and it has been particularly problematic for businesses operating in the social care sector where sleep-in shifts are a common way of working. We have previously reported that a recent case in this area confirmed that for many sleep-in shifts each hour would count as working time and therefore the worker should be paid the NMW for the whole of that shift:
https://www.stephens-scown.co.uk/employment/workplace-law-getting-paid-sleep-shift/
Our article in the summer reported that HMRC had temporarily suspended enforcement action in relation to sleep-in shifts in the social care sector but that suspension ended on 1 November 2017, which date also saw the launch of a new compliance scheme for social care providers who may have incorrectly paid workers below NMW levels for sleep-in shifts.
The backdrop to the scheme is the Government’s commitment, which has been evident for several years now, to ensure that workers are paid fairly and in accordance with NMW levels. Workers within social care are often very low paid whilst at the same time, the increasing pressures on the social care sector are well-publicised have meant that the Government has had to consider how to ensure its future and stability, particularly with the possibility of considerable historic NMW underpayments across the industry. That consideration has led to the introduction of a bespoke, temporary enforcement approach which the Government describes as:
“a proportionate, time-limited, sector-specific approach which recognises the importance of continued care for vulnerable individuals whilst securing arrears of pay for care workers working sleep-in shifts.”
Under this approach:
- Employers within the social care sector will be given the opportunity to opt-in to the Social Care Compliance Scheme (“SCCS”). HMRC officers will retain discretion over the operation of the SCCS on a case by case basis, including which providers will be permitted to enter the scheme taking into account criteria set out in the scheme. Social care employers can apply to enter the SCCS using the following link:
https://www.tax.service.gov.uk/apply-for-social-care-compliance-scheme/capacity-registering
- Where a worker complaint has been received by HMRC about underpayments, social care employers will be contacted directly by HMRC and given the option to join the SCCS
- The scheme requires providers to self-review their systems in order to identify and then repay any wage arrears. They will have a period of 12 months within which to carry out that self-review (with technical support from HMRC) and then three months to pay any arrears due (subject to a long-stop in all cases of 31 March 2019). Provided all arrears are paid within these timescales, employers will not be subject to financial penalties and will not be eligible for public naming.
- An employer who decides not to opt-into the scheme will not be offered any further concessions. They may be investigated by HMRC in the normal way and subject to all possible sanctions including interest, financial penalties (except for sleep-in arrears of pay accrued before 26 July 2017 which HMRC have already agreed to waive due to uncertainties in the legal position), public naming and shaming and prosecution. HMRC can claim arrears over a period of six years prior to the service of a notice of underpayment (applying the prevailing rate of NMW if higher than that in force at the time of the breach) and financial penalties can be charged up to 200% of the arrears owed or a maximum of £20,000 per worker.
The deadline to join the SCCS is 31 December 2018. Social care employers who are contemplating joining the SCCS should first assess whether or not they have workers who are working through sleep-in shifts and then check if they have been paid at least the NMW for the time spent working. This is a complex area and it can be difficult to assess whether or not NMW may be due. Our Employment team is very familiar with the tests to be applied in this area and would be happy to assist if you have received a letter from HMRC or if you are contemplating joining the SCCS.