Low-paid carers are no longer entitled to a £400m settlement from the charities and care homes they work for after the Court of Appeal overturned a decision that those on sleep-in shifts should earn minimum wage.
The court said only hours spent awake counted as work, ruling in favour of an appeal by the social care sector, which is already predicting a £2bn funding deficit by 2020 in the face of growing demand.
Unions were considering going to the Supreme Court after the “disgraceful” ruling which reversed government guidance that meant care sector employers owed six years back pay to staff.
Carers had previously been paid a flat rate when staying overnight with the people they support, but recent tribunals had ruled staff were entitled to minimum wage instead – doubling the current rate.
Social care groups had warned that as many as two-thirds of employers in the already struggling sector faced insolvency if they had been required to pay the bill – due by the end of March 2019.
Both unions and care groups criticised the government for the lack of clarity, which threatened to cause “mayhem” and gave “false expectations” to workers who would now be, rightly, disappointed.
A joint ruling, handed down by lord justices Ernest Ryder, Nicholas Underhill and Rabinder Singh, said: “I believe that sleepers-in… are to be characterised for the purpose of the regulations as available for work… rather than actually working… and so fall within the terms of the sleep-in exception in regulation.”
The appeal was brought by the learning disabilities charity Mencap, supported by the umbrella group Care England, and roughly 200 local and national charities were set to be liable for the back pay ruling.
Under guidance issued by the government in 1999, when the minimum wage was introduced, disability charities, which sent a carer overnight to look after someone with learning difficulties, were required to pay a flat rate “on call” allowance of £25 or £35 to cover the period when they were asleep.
But, following two tribunal cases in 2015 and last year, the Department for Business, Energy and Industrial Strategy (BEIS) changed the guidance in October to state that these organisations must now pay the minimum wage throughout the shift, meaning overnight carers would earn £60 for eight hours of sleep.
In the wake of the decision, HM Revenue and Customs (HMRC) had begun demanding six years worth of missing payments and had started enforcement actions.
While a number of employers, including Mencap, have increased the flat rate for their carers from April 2017, this is not mandatory. The charity estimated the cost of minimum wage back pay in the learning disabilities sector alone would be £400m, with no additional funding from the government.
In the wake of the verdict, Mencap called for the government to legislate quickly so all carers would receive an increase rate for overnight shifts, and to increase social care budgets accordingly.
“We did not want to bring this case,” said Derek Lewis, chair of the Royal Mencap Society.
“We had to do so because of the mayhem throughout the sector that would have been caused by previous court decisions and government enforcement action, including serious damage to Mencap’s work in supporting people with learning disabilities.
“What is clear though, is that dedicated care workers deserve a better deal.”
Trade union Unison supported the initial tribunal against sleep-in rates and said it was a “disgrace” that carers would continue to be “paid a pittance” for the significant responsibilities of the role.
“The blame for this sorry state of affairs that’s hitting some of the country’s lowest paid workers must be laid at the government’s door,” said the union’s general secretary Dave Prentis.
“Ministers are so consumed by Brexit that they’re ignoring huge problems around them. Social care is in crisis, and this situation wouldn’t have arisen if the government had put enough money into the system and enforced minimum wage laws properly.”
BEIS has been approached for comment but had not responded at time of publication.
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