Charity warns of ‘devastating impact’ of £400 million back pay bill for sleep-in carers

Organisations looking after people who have learning disabilities could collapse due to a £400 million bill for back pay for carers, the chair of Mencap has warned.
Derek Lewis

Organisations looking after people who have learning disabilities could collapse due to a £400 million bill for back pay for carers, the chair of Mencap has warned.

Mencap chair Derek Lewis says the financial impact would be ‘devastating’ 

Derek Lewis claimed the financial impact would be ‘devastating’ for smaller care providers, and even a charity as established as the Royal Mencap Society would be severely affected.

The situation is the result of a change in guidance on whether care staff who sleep at their workplace should be paid the minimum wage while they are asleep.

Compensation for sleep-ins

Mencap said HM Revenue and Customs’ (HMRC) demand that organisations pay six years of back pay to workers to compensate them for sleep-in shifts has 'brought the sector to the brink of disaster'.

Mr Lewis said: ‘Sleep-ins are widely used in the learning disability sector to provide care for some of our most vulnerable adults, in their own homes in the communities they live in.

‘The carer is only there “just in case” to provide safety and reassurance and is rarely disturbed. Recent research which looked at the last three years showed that 99.7% of carers slept peacefully.’

On call allowance

He said when the national minimum wage was introduced in 1999, the government advised that time spent asleep did not count as work time, so a flat-rate ‘on call’ allowance has been the norm across the sector.

But following two employment tribunal decisions, the Department for Business, Energy and Industrial Strategy published new guidance in 2016 saying the national minimum wage – and now the national living wage – should be paid for sleep time.

A Court of Appeal ruling on the interpretation of the law is expected
in March 2018.

Mr Lewis said: ‘The unintended consequences have been disastrous as HMRC have begun enforcement action demanding six years’ back pay.

‘Estimates of the costs to the learning disability sector are in the region of £400 million and Royal Mencap Society will be severely affected.

Worse than Southern Cross collapse

‘For many smaller care providers across the country the financial impact will be devastating.’

He warned that the crisis could be worse than the collapse of the Southern Cross care home chain.

The Local Government Association (LGA), which represents the councils that fund much of the care provision, said HMRC should halt its demands.

Izzi Seccombe, chair of the LGA's community well-being board, said ministers would have to provide ‘genuinely new money’ to councils to cover the cost if the back pay demand is enforced.

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