Background
In April 2017, the Employment Appeal Tribunal (EAT) heard arguments on how to deal with sleep-in shifts under the National Minimum Wage Regulations 2015.
The EAT held that employees who perform sleep-in shifts were engaged in time work, regardless of whether they were asleep or not.
As a result, it was held in the case that the learning disability charity, Mencap, had been underpaying their staff who had sleep-in shifts for the purpose of being ‘on-call’.
It was estimated that Mencap might have to pay £20 million in back pay for care workers which could result in the closure of 200 care homes, and 4,000 staff being made redundant. This may be a similar consequence across the board within the care sector.
Since then, the HMRC have been devising an enforcement plan to ensure that businesses do not fail, resulting in thousands losing their jobs, as a result of the change in law. On 1 November 2017, the Home Office released this plan.
Interim Enforcement – ‘Sleep-in’ shifts
HMRC announced the provisions which will be in place for employers within the social care sector from 1 November 2017.
These provisions include the opportunity for social care employers to opt-in to the Social Care Compliance Scheme (SCCS) where underpayments for sleep-in shifts have been made.
Employers who join the scheme will be required to calculate their underpayments of the NMW (with assistance from HMRC – apparently once an employer has joined the scheme they will receive a booklet with advice and setting out the formulas required to calculate the underpayments), and will need to return their declaration of their underpayment within 12 months (or by 31 December 2018 if sooner). Employers will then be required to pay employees any underpayment within 3 months, or by 31 March 2019, if sooner.
Those who comply with the SCCS requirements will not be subject to financial penalties and will not be eligible for naming and shaming as a business who failed to pay the national minimum wage.
Those who fail to opt-into the SCCS scheme will not be offered such concessions and may be subjected to full HMRC investigative processes for any sleep-in payment arrears accrued after 26 July 2017 with a possible result in public naming and prosecution.
Recommendations
If your business is in the social care sector and has failed to pay the national minimum wage as a result of uncertainty regarding the sleep-in shifts, you should consider joining the SCCS, not only to give yourself time to repay the underpayments but also to avoid prosecution and reputational damage.
You can visit the government website, here, to see if you qualify for the scheme and how to opt-in.