National minimum wage and sleeping time

03 August 2017

At the Spring Budget the government announced that it was providing an additional £2bn to councils in England for social care, including £1bn this year.

The government has now announced a set of further, exceptional measures to support the social care sector. HMRC published a statement on 26 July 2017 regarding their current investigations into social care providers for underpayment of “sleep-in” shifts.

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.

Consequently the government will waive the financial penalties faced by employers who are found to have underpaid their workers for “sleep-in” shifts. These penalties are levied by HMRC and do not affect the arrears of wages to be received by workers in cases of underpayment of the National Minimum Wage.

The government recognises that written guidance published before February 2015 was potentially misleading. The waiver is to apply to any arrears of pay resulting from “sleep-in” shifts that took place before 26 July 2017. Any employer underpaying their staff for these shifts in the future will be liable to pay financial penalties, in the usual way, of 200% of the arrears found.

The government will continue to work with representatives of the social care sector to see how it might be possible to minimise any impact on provision of social care as a result of this situation. To allow this work to take place before deadlines of arrears of wages are enforced, the government will adopt a policy of temporarily suspending enforcement activity of “sleep-in” shifts. This suspension will apply until 2 October 2017. It will apply to HMRC investigations where there may be an underpayment in respect of “sleep-in” shifts, and applies to employers in the social care sector only.

You can read HMRC’s full statement here - Enforcement of the National Minimum Wage in the social care sector

HMRC has updated section 3.7 of the National minimum wage law: enforcement policy paper specifying additional circumstances concerning sleeping time, in which a notice of underpayment will not impose a penalty.