On 13th July the court of appeal ruled in the Mencap case about sleep-in pay. The court have decided in favour of Mencap, reversing the decision of lower courts.
This creates an urgent need for the Government to act decisively to clear up the confusion created by earlier court decisions, conflicting versions of the official Government guidance on this subject and HMRC enforcement practice.
Bethphage believes that our staff are our greatest asset and we want to see all care and support workers fairly remunerated for their work. The amount we can pay our staff is constrained by the level of funding the Government makes available through local authorities. In recent years, this hasn’t increased at anything like the rate of the national minimum wage increases and the sleep-in crisis highlighted this. We hope that the long-promised Government announcements on the future funding of adult social care will provide the means to improve support worker earnings. We remain very grateful to our staff for their patience, understanding and support during this difficult period.
The sleep-in crisis created a serious and expensive distraction from our work and caused a considerable amount of worry to organisations like ours and the people who depend on our activities. It is likely that the matter will still be appealed to the Supreme Court but in the meantime, we expect the Government to act quickly to close the HMRC “Social Care Compliance Scheme” and remove the threat of unfunded backpay which jeopardised the future of so many learning disability organisations and the support and employment we provide.
Some of our staff have been asking what the impact of this judgement will be on their pay. We informed staff in June 2017 that we had received local authority funding support to enable us to start making top up payments and these non-contractual payments would continue while the issue is clarified but may cease if the funding is withdrawn and/or the law changes. We will continue making these top up payments unless and until the local authorities change what they are paying us.
The key line in the court judgement is “the only time that counts for NWM purposes is time when the worker is required to be awake for the purposes of working”.
Mencap’s response to the court judgement can be read here.
We will update this page again when there is further news.
Sleep-in support is a service where staff sleep in a person’s home overnight so that they are on hand to respond to any needs or emergencies which arise during the night. As the name implies, workers should normally be able to spend most or all of a sleep-in shift asleep. The historical practice has been to pay staff a flat rate for this service, typically £30 a night.
Following a series of employment tribunal findings and changes to Government guidance and HMRC enforcement practice, it is currently accepted practice that hours spent on sleep-in duties should be included in national minimum wage provision. The “sleep-in crisis” is a consequence of this new interpretation being applied retrospectively whilst neither providers nor the local authorities which fund us have received the additional resources to pay for this.
Bethphage believes that there needs to be a big investment in higher rates of pay for social care staff and the funding of adult social care services and we would normally welcome any initiative that enables us to increase staff pay. However, recent developments in payment for sleep-in shifts threaten the viability of many learning disability services and threaten the very existence of good and successful care providers.
The problem arises from Employment Tribunal decisions where it was ruled that workers should receive the national minimum wage for time spent on sleep-in duties. Subsequent changes were made to Government guidance without consultation or a regulatory impact assessment and were not well publicised. This creates a big increase in the cost of providing sleep-in support, but we and all organisations like us have not received extra money from commissioners to pay for these substantial increases and nor have the commissioners received additional funding for this cost from central government. But the worst part of the problem is that providers are now expected to pay these higher rates retrospectively, for as much as six years. Quite simply, unless we receive higher rates to fund the higher costs AND a backdated payment to cover any backpay, we cannot pay it ourselves.
The biggest problem for support providers is the size of the backpay bill. Mencap estimate their bill as £20m (compared with reserves of £19.6m) and our own bill could exceed our cash reserves (which means we wouldn’t be able to pay the bill and continue trading). So this isn’t a little local difficulty – this is a crisis which threatens to put major providers and lots of smaller providers out of business. Our message to Government is to find the money to pay for the cost of changes to the rules. Nationally, the backpay cost is calculated to be approximately £400 million
Historically staff received a fixed allowance (currently £30 a night) for sleep-ins, but new rulings mean that time spent on sleep-in duties must be included in national minimum wage checks.
How Bethphage are addressing the issue
Bethphage have “topped up” staff pay to the required level since May 2017 and most of our commissioners have agreed to provided the additional money on an interim basis while this is resolved. But neither the councils nor providers like Bethphage have the spare funds to backdate this increase to 2012 and this is the focus of our concern now.
In February, under pressure from HMRC to do so, we agreed to join the “Social Care Compliance Scheme” which requires us to review the payroll for the last 6 years by the end of 2018. The latest any back-payment becomes due on 31st March 2019, but there is no news on how this will be funded.
This isn’t an argument with our staff, who have been very loyal and understanding or with our commissioners who have mostly been supportive, but we can’t pay what we haven’t been given – and that means Government support. Bethphage has been working with our trade association and other Learning Disability providers to seek a solution. We have been interviewed on national and local radio, appeared on News at 10 and in the national press. We believe that this publicity and real fears about the risks to learning disability services are at last getting some Government attention.
The issue remains the subject of legal review and the Court of Appeal is reviewing the Mencap case. The hearing started on 20th March but an outcome had still not been announced at the end of June. This delay is adding risk to providers and may force us to delay publication of our annual accounts because of the risks of the backdated liability.
Some of our local MPs have been supportive in meeting with us and raising the issue within Government, especially Philip Dunne, MP for Ludlow and Daniel Kawczynski, MP for Shrewsbury and Atcham, whilst Jack Dromey, MP for Birmingham Erdington has been pressing the issue within the opposition.
What can you do?
Can you help? We are asking as many people as possible (people we support where appropriate, their families, friends and staff) to write to your MP, visit him/her in their surgeries or add your weight to the public call for a resolution which is fair to staff, providers, commissioners and the people who depend on our services.
For over a year, we have been working with our trade associations and supporting an alliance of organisations affected by the sleep-in crisis to seek an affordable solution to the problem. Through these associations, we have presented options to government for resolving the problem and affordable long term solutions. We have also worked with the councils who commission our services to put in place temporary arrangements which comply with the requirements. However, these “top ups” are not a long term solution and sustainable additional funding will be required to enable us to increase basic sleep-in pay to the national living wage. An explanation of how the “top up” works is included below.
If you would like to know more about the sleep-in crisis, please see:
- the briefing compiled by the sleep-in alliance
- the Learning Disability Voices twitter Feed for up-to-the-minute information
- the Mencap campaign page
- a story in The Guardian about the consequences of the sleep-in crisis
- a story in The Times (8/5/18) (this link is behind a paywall but there is a guest access option)
- the first Guardian story with which we were involved
- our own briefing for that story in August 2017
- an independent survey to assess the impact of the sleep-in pay crisis on the future of social care (added May 2018)
- staff can read and comment on this topic in the Chief Executive’s blog on the staff pages of this site and
- if you would like further information please email firstname.lastname@example.org or call 01743 272880
How the “top up” works
- We work out your normal pay: e.g. 150 hours of day shift work @ £8.10 per hour and 5 sleep-ins (of 10 hours each) @ £30 per shift is 150 x £8.10 plus 5 x £30, which is £1215 + £150 = £1365
- We multiply your total numbers of hours worked by the relevant national minimum wage: in the same example this would be 150 daytime hours and 50 sleep-in hours; 200 hours at the NMW for somebody over 25 is 200 x £7.83 = £1566
- If the second sum is more than the first, we increase sleep-in pay by the difference:
In our example, there is a difference of £201. So we would “top up” sleep-in pay by this amount. The worker would be paid £351 (£201 + £150) for the 5 sleep-ins that month (equivalent to £7.02 per sleep-in hour).
The worker would be receiving their contractual pay for their daytime hours, more than their contractual pay for their sleep-in hours and their average pay for the pay reference period would be equal to the national minimum wage.
The Social Care Compliance Scheme
The scheme has been set up by HMRC to manage the sleep-in crisis. Providers who are suspected of having paid less than the national minimum wage because of the sleep-in ruling are encouraged to join the scheme.
Bethphage joined the SCCS in February 2018.
Under the scheme, providers have until 31st December 2018 to review payroll for the last six years and determine whether there have been underpayments and to calculate the amounts of those underpayments for each employee. Members of the scheme then have until 31st March 2019 to pay any arrears due.
The government has promised to consider whether any support can be provided to meet the costs of this but there are no commitments to pay anything extra. We think this is unfair. Guidance from the government on calculation of the minimum wage historically was very clear that the national minimum wage did not apply to sleep-in shifts and even when it changed in 2015 and 2016, there was no publicity, no impact assessment and no extra funding in spite of the same department’s own guidance that there should be. Councils and providers relied on this guidance which meant that councils did not give providers sufficient funding to pay the relevant National Minimum Wage and providers didn’t pay it.
Bethphage’s response is that if the rules change and increased payments for sleep-in payments must be backdated, then the government must backdate the funding to prevent the very real possibility that more learning disability organisations and charities will go out of business.