Suspected minimum wage breaches at 100 care firms ‘tip of the iceberg’, says minister

Care provider found to have underpaid 184 workers £37,500 in minimum wage arrears, says government

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Photo: Francis Dean/Rex Features

National minimum wage breaches are being investigated at around 100 social care companies, the government has revealed as it named one provider for non-compliance.

Her Majesty’s Revenue and Customs (HMRC) has also began six proactive investigations into the largest care companies to identify possible breaches of minimum wage law.

The government said that East Midlands Crossroads – Caring for Carers, which provides a range of services including carers breaks, had underpaid 184 care workers just over £37,500. This was the largest by far of 70 cases of companies not paying the minimum wage, revealed today by government. It is the third social care company to be named by the government for non-compliance. 

Ultimate Care and Counted 4 were fined in January 2015 for deducting training payments from employees, which then brought their pay under the minimum wage.

Legislation complex

A spokesperson for East Midlands Crossroads – Caring for Carers said: “Over the last few months we have been working closely with HMRC to establish our compliance with the National Minimum Wage regulations. The legislation is complex, in parts ambiguous, and open to interpretation.

“We were unaware of our past noncompliance and worked with HMRC to identify to what extent we needed to back pay our workforce, and to ensure compliance with this complex legislation now and in the future.

“We were pleased to be able to work with the HMRC and are happy that we have been able to fully address this issue, with all back pay having been paid in September 2014.”

Companies are named if they are issued with a notice of underpayment by HMRC for not paying the minimum wage and do not appeal, appeal unsuccessfully or do not meet one of the exceptional conditions for not being named. Where a notice of underpayment is issued, companies are required to pay back the money owed to employees or face a penalty.

‘Tip of the iceberg’

Norman Lamb, minister for care and support, said the 100 care companies being investigated were just ‘the tip of the iceberg’ in the sector.

“We are absolutely committed to getting back the wages people have worked so hard for and will continue to name, shame and fine these employers until every care provider gets the message,” he said.

The government is now working with the Association of Directors of Adult Social Services and other sector organisations to understand more about the causes of non-compliance.

It is also trying to raise awareness of wage standards with employers and care workers, including ensuring that staff know how to complain if they believe they are not being paid the national minimum wage.

Colin Angel, policy and campaigns director at the UK Homecare Association, said: “It is never acceptable that workers are paid less than the minimum wage. We continue to be gravely concerned, however, that underpayment is a symptom of the low value that society, including statutory sector purchasers, places on care services.”

The 70 employers named were today were found to owe workers a total of over £157,000 in arrears. They have been charged financial penalties totalling £70,000

HMRC’s enforcement budget has also been increased by a further £3m to help fund more than 70 extra compliance officers.

‘Scandal’

Heather Wakefield, head of local government at UNISON, added: “The scale of this scandal requires a thorough HMRC investigation that targets far more home care providers – especially those that can afford to pay decent wages.

“The owners of the companies that provide home care should stop looking to exploit their workers in such an underhand way. Attracting and holding on to dedicated, highly trained  staff is not going to be possible if employers insist on breaking the law.”

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9 Responses to Suspected minimum wage breaches at 100 care firms ‘tip of the iceberg’, says minister

  1. Debra Claridge February 25, 2015 at 12:28 am #

    I am afraid the law says there is no excuse whatsoever for non-payment of the National Minimum Wage. Being ignorant is no more of excuse that the many care companies that knowingly exploit 220,000 care workers as the public accounts committee reported recently.

    Every man and his dog now knows that care workers have to be paid all their travel time between clients. They also have to be paid if their call should it run over, which is not uncommon when looking after the sick, elderly and disabled.

    Neither is it a care workers fault if stuck in rush hour traffic, this is working time.

    In fact I can quote Mr Gabriel Murphy Business Unit Head HMRC NMW Compliance from a letter he sent me today, as a care worker that has been denied NMW, he wrote:

    ‘As you know the national minimum wage is payable for working time. This means the actual time that you have worked. Not the planned or anticipated working time. Working time includes your actual contact time with clients, your travelling time and your mandatory training time you are required to undertake’.

    Colin Angel and his mock outrage at companies that do not pay the national minimum wage whilst he totally ignores that his associate Allied Health Care one of the UK’s largest care providers breaks this law, is truly staggering.

    Even the CQC in a recent report said that workers at Allied Health Care were not paid their travel time and their hourly rates therefore fell below the National Minimum Wage.

    The pathetic excuses trotted out by care companies and UKHCA for non-payment are exactly that pathetic excuses.

    NMW is in fact a very simple law indeed. A care worker is no different than a district nurse. If a care worker and a district nurse arrive at their first service user at 7 am and carry on working from client to client until 1 pm then like the office worker or any other worker in fact, they have to be paid from 7 am until 1 pm that is the law.

    Yes folks that’s about as complex as NMW law is!

    It amuses me no end the many care companies I have challenged on twitter and their numerous excuses as to why they might not pay NMW. I often say to these providers,

    ‘Oh you say you don’t know how to work out the National Minimum Wage eh, funny I doubt very much you struggle with your profit and loss accounts or struggle to ensure your own monthly salary is always correct’.

    If working out NMW was really that difficult other workers like my husband who works different hours and shift pattens would be invariably paid incorrectly. Funnily enough he works for a large steel company and his wages are always correct.

    Make no mistake these care companies know full well they break national minimum wage law and they will continue to flout this law until it is robustly enforced.

  2. Fred February 25, 2015 at 12:44 pm #

    Just like the deregulation of the banks (I’m understand it is called freeing up the wealth creators from unnecessary red tape), so the deregulation of care has been a marvellous opportunity for the private sector to take the Micky out of the public and especially the most vulnerable people in society.

    We now have very needy older people being cared for in a rush by people on utterly poverty based wages whilst meanwhile the bankers, who caused all this financial misery, are only prevented from spending all day trousering multi-million pound bonuses by their apparent need to advise other stinking rich specimens how to dodge their taxes.

    Splendid.

    • jim kenny February 25, 2015 at 6:27 pm #

      We now have very needy older people being cared for in a rush by people on utterly poverty based wages.

      Whose fault is that?? Try the local authorities who sign up 15 minute contracts with the home care companies. Of course it is not long enough to deliver any form of support, so what on earth are they agreeing to it for????

      You see Fred you have to start being real and honest. This is 100% the fault of the Local Authorities.

  3. TJHA1 February 25, 2015 at 2:00 pm #

    This is disgraceful but not entirely suprising. The fact that training costs have been deducted from support workers is totally unethical as it is the complany’s duty to provide effective training so their carers can meet the standards that are needed. Unfortunately, too many care agencies do what they can to get the maximum profit rather than provide a good holistic service for their clients and a good standard of pay and training to their employees.

    I think Local Authorities should provide some sort of system to weed out this type of threat to the social care sector by refusing to use agencies who exploit their workers and provide poor quality services to increase their profit tenfold.

    There needs to be a better system in place

  4. jim kenny February 25, 2015 at 3:42 pm #

    Too right there does. Lets start with government setting national minimum fees where companies can at least trade solvently.
    At the moment most councils set fees so low and demands that are so high that companies cannot make ends meet without cheating. Hence the problem.
    Come on public sector its about time you squared up to this honestly and sort out the drastic underfunding of service providers. This has ton on far too long.
    The public sector, yes, ALL of them, need to become realistic and honest, both of which they find very hard to do.

  5. Ruth Cartwright February 25, 2015 at 6:00 pm #

    When I worked for a local authority I was always amazed how little monitoring they did of organisations with which they had contracts, eg home care agencies. No checks to ensure service users were getting the services they were supposed to be and no checks on staff pay and conditions. It was like they handed over a wodge of public money and then left the agency to get on with it. Perhaps it would help if the local authorities who contracted with these agencies which do not pay travelling time or training expenses and do not give their staff even minimum wage were also be named and shamed – they must know that for the money they are offering the agency cannot be providing a good service and treating its staff well.

  6. jim kenny February 25, 2015 at 6:30 pm #

    it is unbelievable. There are now a number of Councils being taken to court by service providers challenging them over unfair (low) fees. This is because the Councils are refusing in their dominant position to pay a fair fee for the true cost of care.
    Complete farce, so now more money going out to solicitors. By the way ALL the councils are losing!!!

  7. jim kenny March 1, 2015 at 10:17 am #

    The truth is in most areas, councils offer home care contracts based on hours attending to the person in need. There is no provision for travel training etc. The rate offers the home care company little more than break even after all its regulatory costs. The truth is these companies should not accept the hourly rates, but some appear to prefer to take it and cheat than close down.
    Most councils know that if they had to pay additional funds to cover travel time training etc, their costs would go through the roof.
    Home care properly funded is just totally uncompetitive alongside Care Homes unproperly funded, which again councils are getting away with.
    The solution to this horrendous mess would be to set a National minimum fee for both care homes and home care. This would be set at a realistic level to provide both services properly without having to cheat employees etc.
    Councils would then merely buy as much provision as it could afford at levels that they had not set, but at a level that would deliver the service properly for all concerned.
    Right now there is huge contempt between councils and service providers. Councils up and down the country openly acknowledge that their fees do not cover the service providers costs, yet they openly set the fees too low in an attempt to get more people cared for at the expense of everyone delivering the service. This is an unacceptable model that is dismally failing everyone involved.
    As I have already stated in a previous post, councils at large are being legally challenged on this issue and losing. What sort of country is it that is allowing its administration to undercut elderly care until challenged by legal eagles.?? Its a shocking situation that needs far more exposure and needs to be corrected forthwith while we still have the chance of correcting it.

    • Debra Claridge March 2, 2015 at 11:11 pm #

      In a FOI I found out my council were paying my employer £12.32 hour in 2012. HMRC after 27 months of delays and prevarications say in one pay period that my hourly rate was just £4.31 hour.

      My employers accounts are available on-line it shows they have over 3.5 million in the companies accounts. This employer and his ilk are making vast profits by stealing from their own workers and the tax payer every single day.

      It is also true also that most councils do indeed hand out millions of pounds of tax payers money without so much as a backward glance. My council handed out 5.3 million in 2012. Yet they had no system in place to ensure that the care workers were even paid their minimum legal entitlement, they simply turned a blind eye.

      I provided evidence to my own council from HMRC that my employer who they commissioned care from broke NMW law. Their lack lustre response to me in an email was ‘We cannot look at individual employers’.

      However, they now have an new Chief Executive whom I tweeted just recently and lo and behold after waiting for a reply from my visit way back in 2014 with Ian Austin MP the commissioning department have now responded.

      They now say that when the new contacts start in April they will now make regular checks to ensue that the care providers meet NMW Law – I’ll believe it when I see it.