Social care providers have been given a year to identify how much they owe workers who were employed as sleep-in carers but not paid the minimum wage.
The Social Care Compliance Scheme (SCCS) launched this week will provide HM Revenue & Customs (HMRC) support in identifying outstanding wages, with “the deadline for arrears” being March 2019.
Representatives for social care and local councils, which fund the sector, said the announcement “buys some time” but said funding was urgently needed to meet these unexpected costs.
Around 200 disability charities warned this summer that they face insolvency after the Government changed guidance clarifying that carers were entitled to the minimum wage for overnight “on-call” work.
“Sleep-in” arrangements are common in the learning disabilities sector, and the Royal Mencap Society has said the bill for their sector alone is estimated to be “in the region of £400m”.
Under rules set in 1999, when the minimum wage was introduced, anyone employed to work overnight was entitled to a flat-rate “on-call allowance” of £25 or £35.
But, following two tribunal cases in 2015 and last year, the Department for Business, Energy and Industrial Strategy (BEIS) clarified guidance in October to state that these organisations must now pay the minimum wage throughout the shift, meaning overnight carers would earn £60 – often for eight hours of sleep.
And charities report HMRC has already begun enforcement action demanding six years’ back pay.
A Government announcement this week says all social care employers are invited to join the SCCS and assess what they owe.
Where HMRC has an outstanding complaint about an employer they will be invited to join directly, but those who don’t opt-in to the scheme will not have the 2019 grace period and will be subject to normal HMRC enforcement.
The announcement doesn't specify funding, but says: “The Government is exploring options to minimise any impact on the sector. The Government has opened discussions with the European Commission to determine whether any support, if deemed necessary, would be subject to EU state aid rules.”
But charity representatives said the scheme just defers the problem to the future.
Tim Cooper, co-chair of Learning Disability Voices and CEO of charity providers United Response, said: “I’m saddened by the Government’s decision today. On behalf of the thousands of vulnerable people we care for, I expected better.
“This is a fudge with potentially disastrous consequences for some of the most vulnerable people in our society.
“We recognise that the Government has taken some measures to relieve the immediate pressure on employers by waiving penalties and allowing up to a year to assess the liability, however it has continued to shirk the fundamental question of how employers are to afford the significant costs – estimated at £400m.
This was echoed by the Local Government Association (LGA), which represents councils.
LGA community wellbeing board chair, Izzi Seccombe, said the grace period “is helpful and buys some much-needed time” to understand the potential impact of the problem.
But Cllr Seccombe said the Government has to shoulder the blame for the problem, saying: “It was misleading Government guidance in the past which caused the confusion over whether National Minimum/Living Wage should apply for sleep-in shifts. Now the Government has clarified the position, it needs to provide genuinely new funding to deal with back-payment.”
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