Social Care Compliance Scheme: what, if anything, you need to do by 31 Dec 2018?

The Court of Appeal has ruled that most workers will not be entitled to the minimum wage for sleep-in shifts. This overturns the decision that led HMRC to set up the Social Care Compliance Scheme (SCCS); but despite this, the SCCS remains open. Are you confused? You are not alone!

Here we explain what is happening and try to help you understand what, if anything, you need to do before the SCCS deadline of the 31st December 2018. We do this under the following headings:

Background
The facts of the ‘Mencap’ case
The SCCS
The Court of Appeal judgment
HMRC’s guidance
So, why is the SCCS still open?
What if I am already in the SCCS?
A final word of caution

Background

Care workers often support the person they care for overnight by ‘sleeping in’. However the law around pay for sleep in shifts has been in a state of flux. For years, many employers only paid a flat rate (for example £20 or £30) for a sleep in shift on the basis that the worker was not ‘available’ for work and was therefore not protected by the minimum wage rules.

They were essentially relying on the National Minimum Wage (NMW) Regulations, which say “hours when a worker is ‘available’ only include hours when the worker is awake for the purposes of working, even if a worker by arrangement sleeps at or near a place of work and the employer provides suitable facilities for sleeping (Regulation 32).

However then a spate of cases came before the Courts, which suggested there was more to it than this. Judges in these cases seemed to be saying that before getting to the question of whether the worker was ‘available’ for work (which is where the ‘exception’ for sleeping is embedded); one had to ask whether they were already actually working. If they were actually working, then you did not need to consider whether they were available for work and as such, the sleep in exception could not apply.

We look at the background to the sleep-in issue some more on our website

HMRC’s Social Care Compliance Scheme was set up in response to this change in approach and in particular in response to a decision in the Employment Appeal Tribunal (EAT) on a group of cases that included the high profile Mencap v Tomlinson-Blake case – the facts of which we look at below (as they are quite important).

The facts of the ‘Mencap’ case

In this case, Mrs Tomlinson-Blake, cared for adults with autism and received a flat rate payment of £22.35 plus one hour’s pay (£6.70) for a nine-hour sleep-in shift (from Mencap, her employer). If Mrs Tomlinson-Blake was required to be awake and performing duties for longer than one hour, she would receive extra pay for those hours. 

Mrs Tomlinson-Blake had her own bedroom and was required to keep a ‘listening ear’ during the night in case her support was required. She was otherwise free to sleep or use her time as she wished, but she could not leave the service user’s premises.

There were only six occasions over a 16-month period when Mrs Tomlinson-Blake was required to be awake to perform duties. Indeed, it was expected that she should get a good night’s sleep, since, depending on the shift pattern, she might have to work the following day.

The judge found that she was constantly required to use her professional judgement to decide if she was needed to intervene, and she was required to be at a place of work and available to work, even when there were no specific tasks to be performed during the shift. He therefore ruled that all hours in her sleep in shifts were working hours and were therefore subject to the minimum wage.

The Social Care Compliance Scheme (SCCS)

Following this decision (even though Mencap immediately appealed it!), we understand that many employers started paying the minimum wage for all hours of a sleep in shift as a matter of best practice. However when judges make decisions like this they are ‘declaring’ both what the law is and what it has always been, and so this left a potentially huge problem for employers in terms of back pay, as minimum wage arrears are due going back up to six years.

HM Revenue and Customs (HMRC) therefore set up the Social Care Compliance Scheme as a framework within which employers could identify any historic minimum wage errors and settle any liabilities. The SCCS is a voluntary scheme that gives employers up to a year to identify what they owe to workers, supported by advice from HMRC, and on beneficial terms, including no penalties. We look at the Social Care Compliance Scheme further on our website

On 13 July 2018, as a result of Mencap’s appeal, the Court of Appeal published a judgment which overturned the EAT decision. Many employers will no doubt have breathed a sigh of relief (as will the Government, who were facing pressure to assist employers to meet their back pay liabilities).

As a consequence of the Court of Appeal judgment, there may have been an expectation that HMRC would simply close the SCCS, however in the last few months HMRC have confirmed that they intend to keep it open. So, what is going on?

To understand what is behind HMRC’s decision to keep the SCCS open, it is probably a good idea to look at exactly what the Court of Appeal judgement means.

The Court of Appeal judgment

The full judgment is available from the Bailii website. Broadly, the Court of Appeal ruled that workers doing sleep in shifts (whilst they are sleeping) are ‘available for work’ rather than actually ‘working’. This means they can be covered by the sleep in exception and are only entitled to the minimum wage when they are required, because they need to undertake a specific activity, to actually be awake.

The Court of Appeal adopted what it referred to as a “bright line” approach. Basically, this involved focusing above all else on what Parliament’s original intention was when drafting the NMW Regulations and the sleep in exception. It was the judge’s view that even though the exception is dealt with as part of the ‘available for work’ provisions; it was actually intended to deal comprehensively with the position of sleep in workers and so shouldn’t only apply in ‘available for work’ cases. 

It is important to note that the judgment was limited to the facts of the case where sleep in staff were “expected to sleep for all or most of the period but may be woken if required to undertake some specific activity”. This means that the position may well be different depending on whether the worker is expected to sleep for all or most of the shift or is expected to work for most of the shift.

HMRC’s guidance

As a result of the Court of Appeal decision, HMRC have released some guidance for employers who have been accepted into the Social Care Compliance Scheme. It outlines what HMRC think the Court of Appeal decision means, to help employers to determine their historic minimum wage exposure. It also gives three examples of when the minimum wage may or may not apply.

Unfortunately, this guidance is not available in the public domain to employers who are still trying to decide what, if anything they need to do about the SCCS. However as the guidance is no doubt very useful in this context too, we are able to share the extract below with you.

As a consequence of the change in case-law, the way employers should now consider the sleeping elements of a worker’s arrangement is different.

The Court of Appeal identified that the key issue to consider is whether a worker is “available for work” rather than actually working. The position is different depending on whether the worker is:

a. expected to sleep for all or most of the shift; or
b. expected to work for most of the shift.

A worker who is expected to work for most of their shift, but is permitted to sleep between activities, is likely to be working rather than “available for work” whilst asleep.

A worker who is required to stay at or near their workplace on the basis that they are expected to sleep for most or all of their shift is likely to be “available for work” for periods during which they are expected to sleep.

In effect, any time a worker is not working but is:
1. “available for work”; and
2. making use of suitable sleeping facilities

is not time they are actually working for NMW purposes unless they are awake for the purpose of working. This means that a worker will not be working when they are expected to sleep and have suitable sleeping facilities available.

In all cases, it is important to consider what happens in practice. Please find below examples that you may wish to take into consideration when conducting your review:

Example 1

Where an employer requires a worker to be awake for the purposes of working, this time is working time for NMW purposes. This could be, for instance, to conduct a handover, provide scheduled assistance to a service user or client. 

Susan is engaged on a sleep-in shift between the hours of 10pm-8am and is provided with suitable sleeping facilities.

From 10pm to 10:30pm, her employer requires her to conduct a handover to a staff member who is conducting a waking night shift. 

From 7am to 8am, Susan is required to assist the waking night worker to administer medication to the service user. 

At all other times, Susan is expected to sleep using the provided facilities. 

The 30 minute handover time and 1 hour taken to administer medication are both working time for NMW purposes. 

Between the hours of 10:30pm and 7am she is not actually working for NMW purposes unless she is awake for the purpose of working as she is expected to sleep.

Example 2

Where a worker is awake for the purposes of working, this time is working time for NMW purposes. This could be, for instance, to perform duties if disturbed whilst engaged on a sleep in shift. 

Gary is generally expected to sleep between the hours of 10pm-8am and is provided with suitable sleeping facilities.

At 2am, Gary is disturbed by the service user who requires assistance. Gary provides support for 30 minutes and returns to bed at 2:30am.

At 6am, Gary is disturbed for a second time with support lasting 30 minutes. Gary returns to bed at 6:30am.

Gary was awake for the purposes of working for a total of 1 hour so is entitled to NMW for this time. 

Example 3

Where a worker is regularly disturbed and required to be awake for most or all of their shift, but is permitted to sleep when there are no tasks to be performed, it is likely that all of this shift is working time. 

Sally’s shift lasts between the hours of 10pm-8am and she is provided with suitable sleeping facilities to use when she is not busy. A typical shift for Sally is as follows.

At 11pm, Sally is disturbed by the service user who requires assistance. Sally provides support for 1 hour and returns to bed at 12am. 

At 12:45, Sally is disturbed by the service user who requires assistance. Sally provides support for 15 minutes and returns to bed at 1am. 

At 1:45am, Sally is disturbed by the service user who requires assistance. Sally provides support for 15 minutes and returns to bed at 2am.

At 3am, Sally is disturbed by the service user who requires assistance. Sally provides support for 20 minutes and returns to bed at 3:20am.

At 4:30am, Sally is disturbed by the service user who requires assistance. Sally provides support for 30 minutes and returns to bed at 5am.

At 5:25am, Sally is disturbed by the service user who requires assistance. Sally provides support for 5 minutes and returns to bed at 5:30am.

At 6am, Sally is disturbed by the service user who requires assistance. Sally provides support for 1 hour and returns to bed at 7am.

In this example, the employer would have to consider whether in practice, it is reasonable for the worker to be expected to sleep throughout the shift. 

If the worker cannot be expected to sleep during all or most of a shift but merely permitted to sleep occasionally, it is likely that all of the shift will be working time for NMW purposes

So why is the SCCS still open?

Even though the Court of Appeal decision means that most employers probably won’t have to pay their workers minimum wage throughout sleep in shifts, it is very important to note that this decision does not go so far as to say that the minimum wage will never be payable throughout a sleep in shift; because each case will still need to be decided on its facts.

The SCCS therefore remains open because there may be some employers out there who still have minimum wage issues and owe their workers arrears. This may be, for example where workers are required to carry out regular checks during the shift and/or the disabled person’s complex needs mean that the worker has to get up and provide support a number of times through the night.

If there is an uncertainty at all about how the Mencap decision affects you, then you should seek advice. We tell you where in our news piece

Furthermore, even if your situation is similar to Example 1 or 2 in HMRC’s guidance, then while your worker may not be due to be paid the minimum wage for all the hours in the sleep in shift, they may be due to be paid for when they were actually working.

In these circumstances, you would need to compare the amount of money due to them for when they were actually working, with the amount of money you paid them for the sleep in shift. If you have underpaid them, then you should still consider entering the SCCS.

You should be aware that when looking for minimum wage issues, you basically look across an entire pay period. So if your worker (aged 35 and entitled to £7.83 per hour (in 2018/19)) usually only gets up for an hour a night but you have a particularly bad night and your worker is up nearly all night, then although a £20 or £30 flat rate payment is likely to mean an underpayment in respect of that particular shift; over the course of the rest of the pay period this may well iron itself out. 

You might also want to enter into the SCCS if you have minimum wage arrears to settle for other errors, e.g. to do with training time or travel time (HMRC will allow you to use the SCCS to do this). As you can see from our website guidance, the minimum wage rules are complicated and underpayments can easily arise.

What if I am already in the SCCs?

You need to weigh everything up and come to a decision about whether you still think you need to be in the SCCS in light of the Court of Appeal judgement. If you do not, then it is our understanding that it is totally possible to withdraw yourself from the scheme or submit a ‘nil’ declaration.

HMRC are sending out communications to employers already in the SCCS and are also contacting them by telephone to discuss their situation in light of the Court of Appeal judgment on a case by case basis. If you do not hear from them, you should contact them: HMRC’s dedicated helpline for Social Care Compliance Scheme is available on telephone 0300 123 4494, Monday to Friday 8.00am to 4.00pm or alternatively contact us by email on: compliancescheme.nmwsocialcare@hmrc.gsi.gov.uk

A final word of caution

It may be that this case proceeds to be considered by the Supreme Court and that the Supreme Court overturn the Court of Appeal decision and find – again – that every hour of a sleep-in should count!

If this happens, we would be pretty much back to square one, in terms of employers having to put right any underpayments (and possibly within something similar to the SCCS).

However, don’t let this worry you too much for now – just be aware that this is a possibility. But do and check back regularly to this website for updates.

(08-11-2018)

Contact: Meredith McCammond (please use our Contact Us form) or follow us on Twitter: @LITRGNews