National Minimum Wage (NMW) has been a key focus for the government for some time now and they have been pursuing sectors they believe do not comply with legislation.
Historically in the care sector, many employers paid a fixed amount to cover any overnight sleep-ins with an additional hourly rate paid for hours the employees was needed.
Two court cases – Mencap v Tomlinson-Blake and Shannon v Rampersad – argued that most care workers on overnight shifts are constantly on call, therefore the employee should receive NMW for the entirety of the shift.
In October 2017, the government introduced a new compliance scheme for the care sector, allowing employers within this sector to review their pay arrangements in line with the above and pay any monies that may be due to employees without being publicly named and shamed.
Both cases have since gone to the Court of Appeal and the decision made a complete U-turn to not count sleep-in shifts as working time, the only time that counts towards national minimum wage is when the worker is required to be awake for working. However, if suitable sleeping facilities are not provided then minimum wage must be paid for the entire shift.
Therefore, the rulings have reverted back to how most employers treated the arrangements in the first instance. HMRC have now updated their guidance to reflect the latest rulings.
Andrea Bridgehouse, owner of My Life-My Choice in Oswaldtwistle which supports children and young adults with disabilities and complex needs, said: “These rulings have sent shockwaves of confusion through many sectors that use night workers, but they set an especially dangerous precedent in the vital care sector.
“Providing quality care is complex and costly enough as it is and the changes could cost our business in excess of £80,000. This would take us to the brink and it’s no exaggeration to say that it seriously threatens our future.
“We’re the only service provider in the area that is set up to deal with these complex issues and if we had to close then it would lead to 176 young people and their families being stripped of the support they depend on, 44 carers out of a job and it would signal the end of a business I have spent 18 years building.
“Due to the previous changes, I now pay my staff £85 a night and will continue to do so, if I make a U-turn and revert to the old rate then my staff will lose pay and leave.”
Lisa Kennery, payroll manager at Pierce, said: “The changes will certainly bring a headache to businesses, particularly in the care sector. Depending on how a business has been calculating pay for sleep-in shifts historically will determine how it will impact a business both financially and operational.
“Businesses like My Life-My Choice will have already changed their rates and paid the higher amount, costing the business thousands of pounds.”
For further information on how these changes may affect your business, please call Lisa Kennery Pierce on 01254 688 100 or visit www.pierce.co.uk