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National Minimum Wage back pay for sleep-ins – latest developments

3 November 2017

Following our update in September, the Government has now announced the availability of a Social Care Compliance Scheme (the ‘Scheme’), for those employers in the social care sector who think they may have paid their shift workers less than National Minimum Wage for sleep-ins.

The Scheme was made available as of 1 November 2017 and provides for the following:

  • in cases where a complaint has already been made against an employer, the employer will be contacted directly by HMRC and encouraged to opt-in to the Scheme. However, employers can also self-elect to enter the scheme here
  • the absolute deadline for joining the Scheme is 31 December 2018
  • once an employer has opted into the Scheme, they will be required to conduct their own review to identify all instances of underpayment/arrears. Employers will be required to submit a declaration of the amount owed to workers to HMRC, within 12 months or by 31 December 2018, whichever is the earlier
  • any arrears must then be paid to workers within three months of returning the declaration or by 31 March 2019, whichever is earlier
  • provided all arrears are paid within the applicable timescales, the Government has confirmed that the employer will not be subject to any financial penalty and/or naming or shaming.

We are advised that employers who do not opt-in to the Scheme will not be offered any further concessions and will be subject to a full HMRC investigation, including financial penalties (currently 200% of the amount owed up to a maximum of £20,000 per worker), naming and shaming and possible prosecution.

The arrears alone are expected to cripple the social care sector, never mind the prospect of financial penalties and damage to reputation. In response, the Government says that it has been liaising with the European Commission on whether any financial assistance, if deemed necessary, would be subject to state aid rules. As yet, therefore, there is no commitment on whether any such funding assistance will be made available.

For those employers who have already had a complaint raised against them, we would strongly recommend that you sign up to the Scheme sooner rather than later in order to give you as much time as possible to review the extent of the liability, prepare your declaration and consider how you will make provision for paying the arrears, pending the Government’s decision on whether financial assistance will be forthcoming.

For those employers who are unclear on whether or not they should sign up to the Scheme and the extent of any underpayments/arrears, do let us know and we would be happy to assist you with this.

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