National minimum wage & sleep-in shifts…the government publishes long awaited guidance

Earlier this year we reported on a judgment which established that the majority of sleep in shifts should be counted as “working time” and therefore paid at National Minimum Wage rate.

Following on from this judgment in the linked cases of “Focus Care Agency Ltd v Roberts; Frudd v The Partington Group and Royal Mencap Society v Tomlinson Blake” we’ve seen huge concern from care providers and charities about how they will deal with potentially crippling liabilities for back pay. Providers may be exposed to claims for up to 6 years of back pay for sleep-in shifts and have called on the government to take action.

The government initially responded quickly albeit on an interim basis by suspending enforcement action by HMRC in relation to sleep-in shifts and confirmed that HMRC will not pursue enforcement action against employers for any underpayment of NMW relating to sleep-in shifts which occurred before 26 July 2017.

Following a couple of delays over the summer in publishing more detailed guidance, the government has now outlined its proposals for a new compliance scheme, the Social Care Compliance Scheme (SCCS) which states:

• Employers can opt into a self-review period (of up to 12 months) during which they will be provided with some support from HMRC to identify arrears which they may owe staff.
• At the end of the review period employers must pay employees any sums owed within 3 months. Provided the employers pay all liabilities within the SCCS timescales they will not be liable to any enforcement penalties.
• Employers who do not opt into the scheme will be liable to normal enforcement powers and penalties from HMRC including fines and public naming.

The government’s guidance can be accessed here

The immediate reaction to the SCCS has been a mixture of confusion and anger. The lack of clarity around exactly what signing up to the SCCS will entail seems to be the main point of concern particularly as the government has  failed to indicate if it  will introduce a cap on retrospective claims  to protect the care sector. There are continued calls for the government to commit to assisting with the financial burden of care providers meeting their liabilities.

To  complicate matters further, Mencap have appealed the outcome of their case with their appeal due to be heard by the Court of Appeal in March 2018.  Mencap hope that their appeal may provide further guidance relating to when sleep in shifts should be paid at NMW. Unless and until Mencap are successful in their appeal the guidance issued in the 3 linked cases remains the current law. If you are a care provider concerned about the potential implications of the case please contact Louise Attrup or Michael Kerrigan for advice.