Following concerns from the social care sector, the Government has announced that is waiving historic financial penalties owed by employers who have underpaid their workers for overnight sleep-in shifts before 26 July 2017. It is also temporarily suspending HMRC enforcement activity concerning the payment of sleep-in shifts by social care providers until 2 October 2017.

Employers should, however, note that these measures will not prevent workers bringing claims for unpaid National Minimum Wage (NMW) and that penalties (which can be 200% of NMW arrears) will be applicable for arrears from 26 July 2017 onwards where enforcement action is taken. The announcement can be accessed here.

The chair of Mencap, Derek Lewis, is one of a number of those who have expressed concerns that claims for arrears of NMW could threaten the stability of the social care sector.

Mencap recently lost its appeal to the EAT against a finding that carers should have had sleep-in hours included in the NMW calculation. In the Mencap case (reported in our May bulletin) the EAT set out the factors which should be considered by the tribunal when determining this question. These include: any regulatory or contractual requirements to have someone present during the night; the extent to which the worker is required to be present by the employer; the degree of responsibility undertaken by the worker during the night; and the immediacy of the requirement on the worker to provide services if an untoward event or emergency arises. This case is being appealed by Mencap and will be heard in the Court of Appeal on 20 March 2018.

Mr Lewis has stated that Mencap changed its payments in April to comply with the NMW rules and new Government guidance. However, he has expressed serious concerns about the impact of potential breach of contract claims for arrears stretching back six years on organisations providing care for those with learning difficulties. He described the situation for Mencap as “the worst crisis that the charity has faced in its 70-year history”. He also raised fears that claims could be brought by carers employed directly by families and individuals. It has been estimated that the potential cost for learning disability charities alone is as much as £400 million.

Updated Government guidance on calculating the NMW can be found here.