The government has delayed its decision about whether to support care providers in paying owed sleep-in payments to care staff by a further month.
During this time, until the beginning of November, providers will not be subject to enforcement by HMRC for not paying the minimum wage to staff on sleep-in shifts.
The government has said the decision would “minimise disruption” to the sector while it decides whether the industry needs further support. This could involve the government providing the sector with money to fund backpay though any such support would need to comply with European Union rules on state aid to private organisations.
The issue of backdated payments for employees of care providers doing sleep-in care services arose following an employment tribunal in May, which ruled that workers were entitled to the national minimum wage for sleep-in hours, rather than a fixed rate.
Following the tribunal, the government has waived historic fines for providers found not to have paid staff the minimum wage for sleep-in shifts up to 26 July 2017.
It also suspended HMRC from enforcing back pay and the minimum wage in the care sector for sleep-in shifts until 2 October while it worked out what impact it could have on the stability of social care. This suspension has now been extended for a further month.
Charities estimated this tribunal ruling could leave care providers needing to find £400 million to pay staff for backdated payments over the past six years, while also leaving a £600 million funding gap for payments over the next four years.
The government said the one-month delay would allow it “to establish how providers’ back pay bills will affect vulnerable people’s care”.
“The evidence base will also ensure any intervention is proportionate and necessary and could be required to satisfy EU State aid rules on government funding for private organisations,” the statement said.
“During this temporary pause, the government will develop a new enforcement scheme for the sector to encourage and support social care providers to identify back pay owed to their staff. This will help to minimise the impact of future minimum wage enforcement in the sector while seeking to ensure workers receive the arrears they are owed.”
‘Uncertainty and anxiety’
Glen Garrod, vice president of the Association of Directors of Adult Social Services (ADASS), welcomed the extension, and said any retrospective claim would “seriously threaten” the care market’s sustainability.
“Any potential retrospective claim could severely impact on the care of thousands of older and disabled people and amplifies the overarching need for an urgent, long-term solution to the sustainability of the care market, and a speedy, fair and consistent solution to the issue of sleep-in payments that is fully funded by government. We would welcome clarity and a resolution of the situation as soon as possible.”
Mencap, the charity at the centre of May’s tribunal ruling, said the government’s announcement was “disappointing”.
Derek Lewis, chairman of Mencap, said the delay would leave service users subjected to “more uncertainty and anxiety” as providers were forced to delay essential investment and local authorities struggle to convince providers to take on new contracts.
“It is nevertheless encouraging that the government appears to accept the need to support the sector in dealing with the £400 million back pay liability. It remains essential that the sector receives full funding for this liability to avoid unacceptable harm to people with a learning disability and insolvencies among providers.”
Unison general secretary Dave Prentis said the extension was a “green light for dodgy employers to carry on paying illegal wages without fear of ever being punished”.
“While there may be some sympathy for charities who owe their sleep-in staff money for not paying the minimum wage when they should have been, many care providers are private equity-backed companies that can well afford to pay up,” he said.
“No government or employer should be above the law. By suspending enforcement, we have grave concerns ministers may well have been acting unlawfully and using powers they don’t have.”
Martin Green, chief executive of Care England, said: “We will continue to work with the government during this extension period with the aim of seeing back pay liability fully funded. However, we must see this issue resolved and are disappointed that the government has not yet made a decision. We also need clarity on the future and how it will be funded. Providers and the people they care for need certainty”.