National minimum wage breaches leave care workers £130m out of pocket

Workers are not being paid enough to cover travel and training, says independent think-tank

Photo: Images Money/Flickr

Care workers are losing out on £130m a year due to employers’ failure to comply with national minimum wage standards, according to a new study.

The study found approximately 160,000 of the UK’s 1.4m care workers are being paid less than the minimum wage, equating to an average loss per person of £815 in 2013-14.

Independent think-tank, the Resolution Foundation, said the ‘wage theft’ was due to staff not being paid for the time spent training, being on call and travelling between clients.

Workers also lose out due to illegal deductions from pay, such as the cost of uniforms, but it was not possible to account for these in the estimates, the foundation said.

Laura Gardiner, senior research and policy analyst at the foundation, said: “Every worker has the right to the minimum wage yet illegal non-payment is all too common in the sector.

“Diminishing public funding and ever tighter commissioning practices are placing pressure on social care providers, but there is simply no excuse for breaking the law.”

Illegal pay

The study found that receiving wages below the legal minimum were also having a knock-on effect on care workers’ retirement savings.

Researchers estimated a total of £4m was missing from pension pots each year, assuming employers make an extra contribution of 3% to workplace pension schemes.

If pension schemes offered by employers are more generous than 3%, workers not being paid the minimum wage will lose out even more.

The breaches also mean the government is missing out on tax revenues – if the missing £130m had been paid to care workers during 2013-14, HMRC would have collected an additional £9m in national insurance contributions alone, the study found.

Sector concerns

HMRC has recently stepped up its focus on social care and in a recent investigation, it ‘named and shamed’ 37 providers for failing to comply with minimum wage standards. It has also had its budget increased by £3m to investigate such companies.

However, the Resolution Foundation has called on the government to “get even tougher” with employers.

Gardiner pointed out social care would need up to a million extra care workers over the next decade to meet the needs of an ageing population.

“Tackling the broader issue of low pay in this sector is a real priority. If we want to see dignity for those receiving care then we need to start investing in the workers who provide it.”

Colin Angel, policy and campaigns director at the United Kingdom Homecare Association, said: “While the foundation’s estimates of the size of underpayment to affected workers are significantly higher than those found in practice by HMRC, their calculations add to growing concerns that the sector is struggling to offer appropriate terms and conditions to frontline workers.”

David Pearson, president of the Association of Directors of Adult Social Services, added: “Adass does not condone law breaking and it is the responsibility of employers to arrange pay conditions that are within the law.

“However, the Care Act requires local authorities to develop a high quality, sustainable market and one in which staff are paid and trained appropriately by providers. Local authorities will have to be assured staff are paid at least the minimum wage.”

The study is part of a wider investigation by the foundation into improving pay and conditions for care workers, due to conclude in March.

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3 Responses to National minimum wage breaches leave care workers £130m out of pocket

  1. John Turnbull February 9, 2015 at 3:25 pm #

    Why do we have a minimum wage?

    Without the minimum wage, young people could leave school at 15, learn a trade and be self sufficient adult workers by 19.

    With the minimum wage, young people leave school at 17, go to university and are jobless and up to their eyes in debt at 21.

    That’s why we have a minimum wage?

  2. D Forshaw February 11, 2015 at 12:28 pm #

    All the low pay problems in care are due to councils refusing to pay a fair price for care and until the funding is made available by councils providers have no alternative.
    Its all well and good ADASS spouting that it does not condone law breaking but they should look closer to home at the councils they represent.

  3. M Butcher February 15, 2015 at 12:23 pm #

    I disagree that all low pay problems are the fault of the LA, many care workers are employed by the private sector and their policies guide pay.

    Being a homecare worker I worked with a variety of service users, some paying ‘privately’ for their care package, others paid for directly by LA or via direct payments. I got NMW for those clients paying ‘privately’, but with 20p per mile travel, agency always ensured ‘private clients’ were often first or last visit, and that didn’t qualify for travel payment as viewed as travel to/from work. Pay was just over the NMW for other service users, but with no payment for travel time, taking it down to NMW. My initial training was unpaid, 0 hour contracts with shifts ‘taken away’ if sick (8 hours notice that couldn’t do one shift, regular shifts for next two weeks removed).

    I attempted to seek employment with another agency, but they wanted an unpaid two-week training period.

    I went into retail.