Investigation into 90 large care providers finds many are flouting pay laws

Letters released under the Freedom of Information Act show a number of government departments are taking action over non-compliance with national minimum wage regulations in the care sector.

Credit: Image Source/Rex Features (posed by models)
Credit: Image Source/Rex Features (posed by models)

A government investigation into 90 residential  and home care providers has identified high levels of non-compliance with national minimum wage regulations, Community Care can reveal.

HM Revenue and Customs (HMRC) has been conducting “targeted enforcement activity” into the care sector, focusing on approximately 45 of the larger residential care providers and 45 of the larger home care providers, the names of which have not been released.

“Some investigations are still ongoing, but, to date, HMRC has identified high levels of non-compliance with national minimum wage regulations, compared to other sectors,” said Jo Swinson, minister for employment relations at the Department for Business, Innovation and Skills (BIS).

Swinson revealed that the main reasons for non-compliance have included payroll administrative errors, non-payment of travel time, incorrect treatment of deductions from pay for uniforms and unpaid training time.

She said a full project evaluation was now being carried out by HMRC and that the findings would be shared with BIS, the Department of Health (DH) and other stakeholders.

Swinson made the comments in response to a letter from care services minister Norman Lamb, sent on 13 March and recently released to Community Care under the Freedom of Information Act.

In a recent speech to delegates from the care sector, Lamb made it clear to providers that non-payment of the minimum wage was unacceptable and said there would be a concerted effort to eradicate such practice. Writing to Swinson in March, he said: “I am deeply concerned about the impact of such practice on the quality of care that individuals receive and the motivation of hardworking care staff.”

He told Swinson the DH was investigating a range of measures to make clear that this practice would not be tolerated, including naming and shaming providers who do not pay the minimum wage and the possibility of imposing fines.

BIS already has a scheme in place to name employers who breach minimum wage laws, which came into effect on 1 January 2011. In her response to Lamb, Swinson said the government would continue to use a variety of channels to implement the policy objectives of the scheme.

This will include publishing the decisions of employment tribunals where an employer has unsuccessfully appealed against a notice requiring them to pay arrears of wages and the increased use of social media to encourage workers to complain if they are paid below the minimum wage.

HMRC will also continue to investigate all complaints made by care workers to the Pay and Work Rights Helpline.

Meanwhile, the DH and the Department for Communities and Local Government are looking at whether further support in the form of guidance could help local authority commissioners to ensure their contractors pay at least the national minimum wage.

The United Kingdom Homecare Association (UKHCA) is currently developing a self-audit tool for providers and working with the DH to identify the causes of potential non-compliance.

“UKHCA has already highlighted the lack of information available from HMRC and BIS to help employers interpret national minimum wage rules for the complex working patterns of home care,” said the association’s policy and campaigns director, Colin Angel.

“It is essential that the home care workforce is adequately rewarded for the vital services they provide and this must be at least at the level of the minimum wage, even during the current financial climate.”

Unison welcomed the move by HMRC to focus more attention on non-compliance with the minimum wage within the care sector. “For too long this predominantly female workforce has suffered from widespread illegal levels of pay,” said Matthew Egan, assistant national officer for local government, police and justice.

“However, these moves must be accompanied by actions to properly fund the care sector, otherwise these problems are likely to persist. Commissioners too need to take responsibility to resolve this problem through contract compliance.”

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