Why on earth have social care workers not been getting the National Minimum Wage?

Last month the government announced it was waiving historic financial penalties and temporarily suspending enforcement of the National Minimum Wage (NMW) for workers required to ‘sleep-in’ on their employer’s premises overnight to look after social care residents.

This is unprecedented action from a government that has, up to now, been rather keen on enforcing the NMW. It appears that some social care employers have said they will collapse if they have to pay arrears, which have been estimated by employers as ranging somewhere between £100 million to £400 million.

These figures are simply ridiculous overestimates. According to the government’s July 2017 evidence to the Low Pay Commission, they recovered £374,000 arrears in social care last year and I calculate that a total of just over £700,000 has been received for workers in social care in the past three years. Note that this includes arrears for issues beyond failure to pay for sleep-ins, such as non-payment of traveling time between visiting clients.

In a week that has seen the government named a record number of underpaying employers in other sectors it is time to have a look at how social care got into this kind of debt – and what will happen next.

What went wrong in social care?

The first thing to say is that most social care is now provided either by private sector companies or charities. Local authorities fund most social care and, faced with continuous government cuts to their budgets, have squeezed social care funding year after year.

Against that tight financial background, a number of social care providers have buried their heads in the sand over the growing certainty that they must pay the minimum wage.

Before the minimum wage was introduced employers commonly paid workers a flat fee for sleeping in, plus an hourly rate for time spent actively working. This was changed by successive employment tribunals from the late noughties onward, albeit with a certain degree of see-sawing back and forth so it really should not be a surprise for employers that the minimum wage applies to workers.

Just how clear is the law on the NMW and sleep-ins?

The law has certainly been in a settled position since the 2013 Whittleston v BJP Home Support Limited Employment Appeal Tribunal.Government guidance on the NMW also makes it clear that the NMW must be paid for sleep-ins.

Six years of minimum wage arrears can be claimed in England, Wales and Northern Ireland and five years in Scotland, so you might wonder why some of the handfuls of large employers who are complaining did not at least consider making provision against the day when they would have to pay up.

Trade unions have been visibly negotiating and campaigning to ensure that social care employers pay up. In particular, UNISON reached a notable agreement (with MENCAP in June 2017, meaning that staff would receive the NMW for sleep-ins from then on.

Employers could also have sought free advice from ACAS if they were in any doubt about the right thing to do – and they should have done so, but some have simply failed to face up to their responsibilities.

What does the government’s partial suspension of enforcement on sleep-ins mean?

Basically, the government’s announcement means the social care sector has three months to get its act together. Employers have been let off of historic civil penalties in current cases. These can be quite substantial, as these penalties are twice the amount owed, up to a maximum of £20,000 per worker.

However, the government will continue to pursue arrears for workers in these cases, and we have been ensured that full enforcement will resume in October.

Resuming normal service will not be enough

Social care providers need to take these announcements as a wake-up call. The government simply cannot afford to let them off of the NMW, and should be clear that no extension of the penalties amnesty will be forthcoming. Providers should face full enforcement for any new offenses that occur from October onwards.

But the government does not come out of this very well either, as squeezing funding on social care has been a contributory factor.

The government must find a way to ensure that social care has sufficient funding and to ensure that social care workers are paid at least the NMW, which is the bare legal minimum. Failure to achieve these goals means that those receiving care and those who deliver it will both suffer, which is something that any shrewd government will want to avoid.