At least 800 employers with ‘significant’ sleep-in underpayments identified

25 July 2018

People Management obtained information under a Freedom of Information request which revealed that at least 800 employers signed up to HMRC’s sleep-in wages disclosure scheme before the Court of Appeal ruled that such shifts did not need to be paid at National Minimum Wage (NMW).

The Freedom of Information request revealed that 835 employers entered the Social Care Compliance Scheme (SCCS) between 1 November 2017 and 30 April 2018.

The SCCS was launched on 1 November 2017 to allow social care providers that may have paid staff below the legal minimum for sleep-in shifts – essentially, where care workers are required to stay on work premises overnight –  to tell the taxman about it. By making such a disclosure, businesses could avoid being fined – currently 200 per cent of the amount owed, capped at £20,000 per worker – or added to the periodically published name-and-shame list of employers who have failed to pay staff at least NMW.

In its first six months, the SCCS also identified a total £735,494 of arrears owed to 479 workers, although the scheme required employers to disclose all potential NMW breaches, not just sleep-in shift underpayments. 

In a case brought by care support worker Claire Tomlinson-Blake against Royal Mencap Society, an employment tribunal ruled in August 2016 that sleep-in shifts must be paid at NMW. The Employment Appeal Tribunal (EAT) agreed in an appeal judgment in April 2017.

However, earlier this month, the Court of Appeal overturned these previous rulings, deciding that sleep-in shifts did not attract NMW. In his judgment, with which the other two judges unanimously agreed, Lord Justice Underhill explained this was because sleep-in workers were “available for work” but not “actually working”.

The Court of Appeal judgment was welcomed by many employers in the social care sector, which had faced a reported £400m pay bill between them if the original tribunal finding was upheld. However, trade union Unison announced it was considering an appeal to the Supreme Court shortly after the Court of Appeal’s judgment was handed down.

When asked about the future of SCCS, a government spokesperson said: “We are considering the [Court of Appeal] judgment and will comment shortly on its implications.”


CIPP comment

We notice that HMRC’s guidance Tell HMRC if you’ve underpaid National Minimum Wage in the social care sector has removed the ‘Decide if sleep-in shifts are counted as work’ section - we assume this has been done to reflect the latest ruling that sleep-in shifts do not attract NMW.