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Ministers to waive penalties over back pay owed by care homes

Historic financial penalties owed by care homes who have underpaid their staff for overnight sleep-in shifts are to be waived, the government has announced.

Historic financial penalties owed by care homes who have underpaid their staff for overnight sleep-in shifts are to be waived, the government has announced

Learning disability charity Mencap has said that since 1999, care homes operated under advice that time spent asleep by care staff in residential homes and supported living residences didn't count as work time, for the purposes of the National Minimum Wage (NMW).

The payment of a flat rate on call allowance had been the norm across the sector ever since, it said.

Wrongful guidance

Following two employment tribunals, new guidance in October last year recognised that the previous guidance was wrong and the NMW should be paid for sleep time instead.

But Mencap has previously said that the unintended consequences have been 'disastrous as Her Majesty's Revenue and

Historic financial penalties owed by care homes who have underpaid their staff for overnight sleep-in shifts are to be waived, the government has announced


Royal Mencap Society chair Derek Lewis. Picture: Mencap

Learning disability charity Mencap has said that since 1999, care homes operated under advice that time spent asleep by care staff in residential homes and supported living residences didn't count as work time, for the purposes of the National Minimum Wage (NMW).

The payment of a flat rate on call allowance had been the norm across the sector ever since, it said.

Wrongful guidance

Following two employment tribunals, new guidance in October last year recognised that the previous guidance was wrong and the NMW should be paid for sleep time instead.

But Mencap has previously said that the unintended consequences have been 'disastrous as Her Majesty's Revenue and Customs (HMRC) have begun enforcement action demanding back pay'.

It estimated that the total bill for back pay – in some cases dating back six years – could be £400 million.

Many providers would be unable to meet the demands and could face insolvency because of it, the charity said.

Temporary suspension

Now ministers have announced it will waive historic financial penalties owed by employers who have underpaid their staff for overnight sleep-in shifts before 26 July this year and temporarily suspend HMRC enforcement activity concerning payment of sleep-in shifts by social care providers until 2 October.

The measures are intended to minimise disruption to the sector, a spokesperson said.

But they added that the government remains committed to ensuring workers in this sector receive the minimum wage they are legally entitled to, including historic arrears.

Commitment to funding

Commenting on the announcement Royal Mencap Society chair Derek Lewis said: 'As the government well knows, the critical issue for providers of vital sleep-in care for those with serious learning disabilities is the unfunded liability for six years' of back pay.

'This arises out of the government's change in guidance on the application of the National Living Wage, coupled with aggressive HMRC enforcement action.

'The announcement of a brief two-month stay in enforcement action is welcome, as is the assurance that penalties will not be levied on top of the back pay liability, but neither addresses the catastrophic impact of the £400 million back pay bill across the sector on providers, people who have learning disabilities and care workers in one of the most vulnerable sectors of society.

'We reiterate our call to government to accept its responsibility and make an urgent commitment to fund the back pay bill, for the sake of those vulnerable people who depend on this care and for the dedicated people who provide that care.'

Unison general secretary Dave Prentis called the announcement a 'huge blow for low-paid workers'.

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