If you are a regular reader of our blogs, you may have noticed our frequent updates regarding the pay workers receive to conduct sleep-in shifts and whether it should be paid at the relevant National Minimum Wage or National Living Wage (referred to collectively as “NMW” in this post) rate as opposed to a flat rate for staying the night. The main factors that determine whether a worker is entitled to the NMW for a sleep-in can be found in our most recent blog “Sleeping on the job: Clarification on sleep-in payments”:
The focus now has turned to enforcing those workers’ rights. In order to do this workers can bring a claim for failure to pay NMW themselves as either an unlawful deduction from wages in the Employment Tribunal or alternatively, as a breach of contract claim in the County Court. Which of these options is the most appropriate will depend on the circumstances. Currently, a Tribunal can only award two years’ worth of back pay but there is no fee to submit a claim, whereas a County Court claim requires a fee which is dependent on the amount of money claimed but it could be possible to claim up to six years’ worth of back pay in the County Court.
Failure to comply with NMW can also be investigated by HMRC under direction from the Department of Business, Energy and Industrial Strategy. HMRC action can be instigated by workers or HMRC may discover underpayment of NMW through company audits.
If HMRC find that there has been an under-payment of the NMW they may issue a Notice of Underpayment which requires the employer to reimburse workers who have not been paid the NMW in full and HMRC can also issue a fine for payment within 28 days of the notice. The fine can be up to 200% of the underpayment or up to £20,000 per worker. This amount may be reduced if the employer pays off the underpayment within 14 days of receiving notice of it. In addition to the above, HMRC have the power to “name and shame” employers that fail to pay NMW and can pursue criminal enforcement.
Due to the emergence of sleep-in worker cases HMRC suspended enforcement action against employers for failure to pay NMW in these circumstances as fines were likely to have a significant financial impact on care providers. The suspension of enforcement action did not impact on the ability of workers to bring a claim for underpayment of NMW in the Court or Tribunal.
On 1 November 2017 enforcement activity by HMRC resumed. A new scheme was opened at the same time called the Social Care Compliance Scheme which allows employers in the social care sector to voluntarily “opt in” to the scheme. Once an employer has entered into the scheme they will have up to a year to identify what they owe to workers which can be supported by advice from HMRC. Following this self-review period, employers have up to three months to pay workers. Where an employer does not opt into the scheme they may be subject to normal enforcement procedures if they have not paid the correct level of NMW for sleep-ins conducted by their workers.
This new scheme is an attempt to give workers their entitlement to NMW but at the same time prevent bankrupting social care providers, which is clearly a fine balancing act.
As you can see from the comments posted in response to our other blogs on this topic there has been a lively debate about this issue which you are welcome to join. If you would like specific advice about your situation or the implications for your business please contact us directly.