Crisis for care providers: why latest legal ruling makes it necessary to reform commissioning practices

Cash-strapped care providers face mounting pressure from the latest Employment Appeal Tribunal decision on care workers’ pay. The increased staffing costs come at a time when the sector is already facing a funding crisis, as local councils fail to pay the true price of care.

The recent Whittlestone v BJP Home Support Limited [2013] ruling is a stark reminder to care providers of the duty to pay staff the national minimum wage, taking into account travel time and when someone works over night on a sleepover shift.

To comply with this ruling, many care providers will have to change their existing working arrangements. The consequences for non-compliance include civil penalties and criminal sanctions.

As has been pointed out in the past, most care providers would like to pay higher rates to their valued employees; unfortunately, the lack of adequate funding from local councils often makes this impossible. The dominant position of local councils has been used to drive down the price that is paid for care.

Commissioning practices such as micro-tendering and e-tendering mean that local councils secure care packages at the lowest possible rate. This may be below the actual cost of providing the care. A number of councils have been taken to task via Judicial Review, the last resort for care providers unable to negotiate a fair price for care.

The ability of care providers to comply with the latest legal ruling is threatened by local council commissioning practices, such as reduced fee rates, not paying for travel time and 15 minute care visits, particularly in home care. A survey by United Kingdom Homecare Association found that the overwhelming majority of care providers were only paid by local councils for contact time with clients. Less than 2% of providers were paid anything at all towards travel time.

The Low Pay Commission’s 2012 report confirms that this problem is exacerbated by local councils moving towards “minute by minute” charging, with significant use of 15-minute care visits. This has resulted in increased travel time and placed considerable strain on care providers to meet their minimum wage obligations. Councils are due to be given statutory guidance on minimum wage compliance.

The Whittlestone ruling coincides with HM Revenue and Custom’s (HMRC) two-year investigation into minimum wage compliance in the care sector. HMRC cite non-payment of travel time as one of the main factors in non-compliance. This highlights the need for reformed commissioning practices so that care providers can continue to provide high quality care and reward their valued and deserving staff.

James Sage is a solicitor at QualitySolicitors Burroughs Day, whose specialist social care team advises care providers on employment law, regulatory and funding issues.