New sleepover ruling could save social care charities millions

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Social care bodies say new Court of Appeal ruling could absolve charities of millions of pounds of back payments for sleepover shifts 

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13th July 2018 by Susan Smith 0 Comments

The UK Court of Appeal has ruled in favour of a social care charity that could save the wider sector millions in back-dated sleepover payments.

The court has ruled that employees who sleep-in are engaged in "time work" and are therefore entitled to the national minimum wage (NMW) when they are carrying out duties. They are not entitled to the NMW for the full duration of their sleep-in shift. 

The decision overturns a previous employment tribunal which ruled that workers were entitled to the NMW for every hour of a sleep-in shift.

The 2015 case resulted in HMRC pursuing care providers offering sleep-in services for six years of back pay for all staff who had performed sleep-in shifts. This bill was estimated to be around £400 million in total for the entire care sector.

In 2017, HMRC set up the Social Care Compliance Scheme which gave care providers one year to self-assess their liability and a further three months to pay back workers.

Notably, this scheme offered no assistance to providers in assessing their liability, locating their past staff of up to six years ago nor any information on how past and current employees would be paid.

Crucially the government did not increase money going to local authorities or care providers to cover the back pay.

The Coalition of Care and Support Providers in Scotland (CCPS), which represents third sector care providers, said its members had been complying with the ruling to pay staff the minimum wage for all sleepover hours worked since 2015.

Annie Gunner Logan, chief executive of CCPS said members were committed to paying staff the living wage for all hours worked, including sleepovers.

She however welcomed the potential of the new ruling to offer relief to charities that are being pursued by HMRC for up to six years of back pay, even though the original ruling was made in 2014.

Gunner Logan said: “CCPS does not interpret today’s judgement as any kind of victory for care providers, as we have consistently supported the application of minimum wage regulations to sleepovers.

“In our view, it would be highly regrettable if the judgement came to be seen as turning the clock back on sleepover pay. It has always struck us, however, as unreasonable for HMRC to be pursuing providers for back pay beyond the point at which the original legal precedent was set.”

Scottish Ministers made a commitment in 2016 that all care staff would get the full living wage. In 2017 this was extended to include sleepover shifts.

Unfortunately, according to CCPS, not all Scottish local authorities are currently underwriting this commitment in their contracts with Scottish charities, so the burden on providing wage rises is falling on the charity.

The 2015 case resulted in HMRC pursuing care providers offering sleep-in services for six years of back pay for all staff who had performed sleep-in shifts. This bill was estimated to be around £400 million in total for the entire care sector.

In 2017, HMRC set up the Social Care Compliance Scheme which gave care providers one year to self-assess their liability and a further three months to pay back workers.

Notably, this scheme offered no assistance to providers in assessing their liability, locating their past staff of up to six years ago nor any information on how past and current employees would be paid.

Government did not increase money going to local authorities or care providers to cover the back pay.

The Coalition of Care and Support Providers in Scotland (CCPS), which represents third sector care providers, said its members had been complying with the ruling to pay staff the minimum wage for all sleepover hours worked since 2015.

Annie Gunner Logan, chief executive of CCPS said its members were committed to paying staff the living wage for all hours worked, including sleepovers.

She however welcomed the potential of the new ruling to offer relief to charities that are being pursued by HMRC for up to six years of back pay, even though the original ruling was made in 2014.

Gunner Logan said: “CCPS does not interpret today’s judgement as any kind of victory for care providers, as we have consistently supported the application of minimum wage regulations to sleepovers.

“In our view, it would be highly regrettable if the judgement came to be seen as turning the clock back on sleepover pay. It has always struck us, however, as unreasonable for HMRC to be pursuing providers for back pay beyond the point at which the original legal precedent was set.”

Scottish Ministers made a commitment in 2016 that all care staff would get the full living wage. In 2017 this was extended to include sleepover shifts.

Unfortunately, according to CCPS, not all Scottish local authorities are currently underwriting this commitment in their contracts with Scottish charities, so the burden on providing wage rises is falling on charities.