HMRC enforcement action update: National Minimum Wage sleep in pay decision delayed

4th October 2017

The Government has announced a one-month delay to the decision over how HMRC enforcement action for National Minimum Wage liabilities for sleep in shifts should be addressed.

In July 2017, the Government announced the following measures in Enforcement of the National Minimum Wage in the social care sector: 

  • to waive financial penalties faced by all employers found to have underpaid their workers for “sleep-in shifts, when those shifts took place before 26 July 2017;
  • to suspend HM Revenue and Customs enforcement activity concerning payment of “sleep-in” shifts by social care providers, which will apply until 2 October 2017
  • to work with representatives of the social care sector, during the period of that suspension, to see how it might be possible to minimize any impact on provision of social care as a result of this situation.

Providers across the care sector have been waiting with baited breathe to find out how this challenging issue will be addressed by Government intervention. At a time when care services are severely stretched and many providers teetering on the brink of financial viability, this will be a further unwelcome delay.

Whilst the extension until early November 2017 means a further period of time when providers will not be subject to enforcement by HMRC for not paying the minimum wage to staff on sleep-in shifts, it gives no indication as to how resolution of this complex issue will be achieved.

The announcement confirms that Government is “exploring options to “minimise disruption” to the sector and that it plans for engage “more widely with the social care sector” as a means to decide the intervention strategy.

We continue to monitor this issue with interest and provide guidance to our provider clients on how this may impact their ongoing and future business transactions.

Any provider concerned about their sleep in pay practices (or a business they are in the process of acquiring) should:-

  1. act swiftly given the extended deadline;
  2. ascertain the extent of their potential financial exposure;
  3. understand the steps that can be taken to crystalise their liabilities; and
  4. develop a strategy to implement a legally compliant pay system

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