Social Care employers are set for difficult times ahead as the HMRC set out the plans for the Social Care Compliance Scheme (SCCS) to address breaches of the National Minimum Wage requirements when it comes to the remuneration levels of ‘sleep-in’ shifts.
Typically, care sector workers have been paid a lump sum allowance when scheduled to undertake a ‘sleep-in’ shift that generally fell below the national minimum wage levels. Historically, as the individual was not performing their duties at the time of the ‘sleep-in’ shift this was acceptable. However, following a number of cases which found that ‘sleep-in’ shifts (in some circumstances) were to be considered as ‘working time’ and therefore, subject to the requirements of the national minimum wage provisions, the HMRC have taken action to seek out and prosecute those employers who are not meeting the national minimum wage requirements.
Given that the expected prosecution and back payments, spanning over 6 years’, would have a considerable impact on the social care sector, the HMRC paused their enforcement activity in July of this year whilst the Government undertook a review.
The work carried out in the summer highlighted the risks which the social care sector would face as a result of the historical liabilities they may be faced with and as a result have introduced an interim enforcement approach, the Social Care Compliance Scheme (SCCS) which the HMRC will provide to companies who consider themselves to be at risk.
The HMRC will be making direct contact with those employers where a worker complaint has been received. However, social care employers will also be able to self-select into the SCCS where applicable.
Anyone opting in to the Scheme will be provided with a period of 12 months to carry out a self-assessment (with access to HMRC technical support), followed by a period of three months to pay all arrears.
In opting in to the SCCS employers will avoid the HMRC penalties, currently 200% of the amount you owe your workers, up to a maximum of £20,000 per worker and avoid a public naming and shaming. However, the commitment is then there to repay the back pay, either within three months of the end of the 12 month assessment period and no later than 31st March 2019, regardless of when the employer signed up to the SCCS.
Once employers have joined the SCCS they must:
- review the amount they have paid their workers – HMRC can help with this process
- return a declaration form within 12 months of receiving it, or by 31 December 2018 if sooner
- pay workers any underpayment for sleep-in shifts within 3 months of returning your declaration or by 31 March 2019, whichever is sooner
- pay workers any other National Minimum Wage underpayments discovered before the declaration form is returned
- pay any additional tax and National Insurance contributions that result from any underpayment
- make sure workers are paid at least the National Minimum Wage for time worked during sleep-in shifts from the point the underpayment is discovered
- keep records of how the Company have decided if they have underpaid workers and calculated what is owed
Moving forward it is likely to be the last we have heard of this issue and the knock on effects of the recent rulings and the position of the HMRC on this matter is likely to lead to increased rates for the provision of care, some private providers being faced with insolvency and the likelihood of outsourced provisions being handed back to local authorities who are already struggling under the strain. Not to mention that this not only affects companies, but individuals who are responsible for funding their own care and individuals who receive money to fund their own care (such as through a direct payment, social care personal budget or personal health budget) and would therefore be considered an ‘employer’.
If you are a care sector provider who is considering your position in relation to the SCCS please get in touch and our Consultants can support you.