HMRC waives enforcement against the care sector for failure to pay the national minimum wage

Thu 3rd Aug 2017

The National Minimum Wage (NMW) was introduced in 1999 and subsequently amended by the NMW Regulations 2015. All employers irrespective of their size are obliged to pay qualifying workers the required NMW rates or face enforcement by HM Revenue & Customs (HMRC) that may include notice of underpayment, fines for non-compliance, criminal penalties, possible disqualification from holding company directorships and/or being ‘named and shamed’.

Earlier this year, the Employment Appeal Tribunal decided in the Mencap sleep-in appeal case that care workers who are required to sleep in on site should have these hours taken into account when calculating their hours worked for the purposes of the national minimum wage. The decision had great consequences on the care sector as they were exposed to HMRC enforcement and affordability of future wage costs is also of great concern. Following this ruling, Mencap, the UK charity for people with learning disability, agreed to pay the NMW to staff who carry out sleep-in shifts.

Following the current investigation into the practices of social care providers in the underpayment of their workers in respect of ‘sleep-in’ shifts, HM Revenue & Customs (HMRC)’s has waived its policy on enforcement and prosecution of social care employers that are in breach of the NMW as a consequence of the Mencap case. It acknowledges the cumulative financial liability, penalties, and arrears of wages and recognises the impact an enforcement will have in the care sector.

The government has now announced that it:

  • will waive the historic financial penalties owed by employers who have underpaid their workers in respect of overnight sleep-in shifts that took place before 26 July 2017. Employers found to have underpaid their staff after that date will face the usual HMRC enforcement. Section 3.7 of HMRC's enforcement policy has been amended to reflect this.
  • is suspending HMRC enforcement activity in respect of "sleep-in" shifts by social care providers until 2 October 2017. This will apply to underpayment in respect of sleep-in shifts in the social care sector only.

Even though this decision offers some respite for care sector employers’ retrospective liabilities to pay the NMW, it is clear that from 27 July 2017 onwards HMRC will take appropriate action to ensure that the NMW is paid. Employers should, therefore, review employment contract and policies to ensure workers are being paid the NMW and be prepared to make changes to minimize the risk of future enforcement action being taken by HMRC.


If you would like more information or advice relating to this article or an Employment law matter, please do not hesitate to contact Chris Cook on 01727 798098.

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