Government waives financial penalties for care homes in “sleep-in” wage dispute

The Government has said it will waive the financial penalties faced by organisations found to have underpaid their workers for “sleep-in” shifts.

It said this will not affect the arrears of wages to be received by workers in cases of underpayment of the National Minimum Wage.

Under current laws, employers found not to have paid the National Minimum Wage face penalties of 200 per cent of arrears found.

The measures form part of its pledge to “minimise” the impact of an estimated £400 million back-pay bill, as it moves to strengthen the social care sector, not weaken it.

“The government recognises that the cumulative financial liability of penalties and arrears of wages could pose significant challenges to the social care sector. In extreme circumstances, providers may be unable to meet their obligations to repay their workers,” said HM Revenue & Customs (HMRC) in a statement.

Prior to the announcement, learning disability charity Mencap warned that the sector is “on the brink of collapse”, with many organisations facing insolvency if the penalties stood.

Derek Lewis, chair of Mencap, said: “When the NMW was introduced in 1999, BIS advised that time spent asleep by care staff in residential homes and supported living residences didn’t count as work time for the purposes of the NMW. So the payment of a flat rate “on call” allowance has been the norm across the sector ever since.

“Following two employment tribunal decisions BEIS published definitive new guidance in October 2016 recognising that the previous guidance was wrong and the NMW should be paid for sleep-time instead.

“The unintended consequences have been disastrous as HMRC have begun enforcement action demanding six years back pay.”