The government has announced exceptional measures to temporarily relieve the impact felt by social care providers regarding minimum wage rules for sleep-in shifts.

In its statement, the government says “The HM Revenue and Customs is currently investigating 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 light of this, it has decided to waive financial penalties faced by employers who have underpaid their workers for overnight sleep-in shifts. This waiver applies to shifts that have taken place before 26th July 2017. It will also temporarily halt HMRC enforcement activity regarding payment of sleep-in shifts by social care providers until 2nd October 2017.

Why has the government made this decision?

In the social care sector, the standard practice was to pay workers a flat- rate allowance for a sleep-in shift. However, this practice was challenged by workers in two recent Employment Tribunal cases. Following these rulings, the government issued guidance which states that “A worker, who is found to be working, even though they are asleep, is entitled to the minimum wage for the entire time they are at work. Workers may be found to be ‘working’ whilst asleep if, for example, there is a statutory requirement for them to be present or they would face disciplinary action if they left the workplace. They would then be entitled to the minimum wage”. It goes on to give an example of a person who works in a care home on the overnight shift and sleeps on the premises and states it is likely they would be deemed as “working” even when they are sleeping.

The HMRC has made demands of back payments for up to six years, which is estimated to cost the sector an eye-watering £400m! This has raised mounting concerns amongst care providers about the enormous strain HMRC’s enforcement activity is placing on the sector.

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