Care providers on verge of disaster due to sleep-in shift crisis

10 May 2018

An employment tribunal decision in 2017 ruled that care providers in the UK were breaching the minimum wage act by paying sleep-in workers a flat rate for night-work plus an hourly rate for the hours that they physically work. The ruling means that employers are now required to pay sleep-in workers the minimum wage for the full shift regardless of whether they are asleep or physically working.

With bill for the industry being at an estimated £400 million, over two-thirds of care providers, many of which are charities, are seriously concerned that payback demands could make their organisation unfeasible. HMRC are actively forcing compliance with the ruling, requiring companies to actively go back and pay six years’ worth of arrears to employees plus associated tax and National Insurance. If organisations fail to comply they face penalties, public naming and shaming and criminal prosecution.

Only six per cent of providers say they have budgeted for any back-pay liability and nearly half of providers say they will have to make redundancies if they receive no more funding. One fifth said they will be forced to sell properties which previously housed disabled people requiring care.

HMRC have introduced a scheme that affected companies could sign up to, however this only allows them to defer the tax to March 2019 if they can show they have gone back and paid the employees the amounts they are owed.  Even so, the vast majority of care providers and charities won’t have the cash reserves to meet their liabilities.

Please feel free to contact me if your business has been affected by this ruling and you need advice – we can help discuss your available options.