National Minimum Wage: Sleep-in pay Update HMRC resumes enforcement action with new self-review compliance scheme

8th November 2017


After several long months of waiting, the government has announced how it plans to tackle the ongoing perplexity of what to pay social care workers who perform sleep-in shifts.

The announcement was made on 1 November 2017, following the suspension of HMRC National Minimum Wage (NMW) enforcement action since July 2017.

What’s new?

The new Social Care Compliance Scheme (SCCS) is designed for social care providers to check whether they have paid their workers National Minimum Wage (NMW) rates of pay. The specific aim is to assess underpayment of sleep-in shift pay.

The key facts:

  • It is a voluntary scheme, so providers can opt-in or opt-out.
  • For those who opt-out, HMRC’s usual enforcement procedures will apply, as will the current penalties and sanctions for non-compliance.
  • If a provider opts-in they receive advice from HMRC to enable them to self-review whether they have paid NMW.
  • For those providers who are currently under investigation, it is understood that HMRC will communicate the next steps and options available.
  • The scheme is not open to those who have already been prosecuted for NMW underpayments.
  • The deadline for the self-review is 12 months after receiving the declaration form, or by 31 December 2018 (if sooner).
  • If a self-review highlights a failure to pay NMW for sleep-in shifts, the provider has up to 3 months to pay workers back pay, or by 31 March 2019, whichever is sooner.
  • In addition to back pay, additional tax and NICs will need to be paid.

What are the benefits?

Providers who opt in and pay any arrears of NMW will benefit from the waiver of penalty fines and sanctions – currently 200% of the underpayment amount – up to £20,000 per worker, and “naming and shaming” publicity.

What should providers do? 

It is regretful for providers that the announcement doesn’t tackle the fundamental issue at play: how to assess whether their arrangements are compliant with NMW rates of pay.

Whilst the NMW guidance recognises it is a complex issue and of critical importance to the social care sector it doesn’t give any significant or new insight into what HMRC are taking into account in their assessments. The guidance cross references the recent Mencap EAT decision regarding the “multi-factorial approach” to assessing sleeping time cases (see our previous updates), which is currently under appeal to the Court of Appeal. With a hearing in spring 2018, it could be well into next year before that judgment is delivered and further clarity provided.

At this stage, the best course of action for any provider concerned that they may be at risk of underpayment of NMW for sleep-in shifts is to consider taking legal advice and a confidential risk assessment of their practices, coupled with a financial assessment of their potential liabilities. The SCCS scheme is open until December 2018, so early action of this nature will allow that assessment to be made before a provider commits their entry to the scheme.

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