Care sector provider facing National Minimum Wage challenge
16th September 2016
National Minimum Wage (NMW) problems in the care sector have been never been far from the news since the highly publicised case of Whittlestone v BJP Homesupport was decided by the courts in 2014. Since then a number of cases have condemned practices in the care sector by upholding workers claims that they have been paid below the NMW.
Most recently, seventeen care workers of Sevacare have brought Employment Tribunal claims with the support of Unison over alleged failures to pay NMW. It has been reported in the press as the biggest legal claim of this type.
What has happened?
Some of the workers roles would involve living in the home of elderly women who suffer from severe dementia for a period of seven days at a time. The “live in” workers, who sleep in the same room as the patient, state that they are often required to tend on the patient through the night and therefore they claim they are effectively working 24 hours per day. On this basis the workers claim that they were paid £3.27 per hour at a time when the NMW was at £6.70.
Sevacare deny the claims and state that the workers hours were covered by a “daily average agreement” being paid for 10 hours work (at a rate of £7.85 per hour).Other workers also claim that they were not paid NMW due to the failure to pay for travel time between appointments.
Haringey Council who contracted Sevacare are also being sued by the workers for failing to ensure that NMW was paid.
What you should be looking out for?
The main principles relevant to the care sector are as follows:
- Time spent travelling between appointments is generally regarded as time worked for the purposes of NMW, subject to some small exceptions.
- Sleepovers: if an employee is required to remain on a service user’s premises during the night and they would be disciplined for failing to do so, then the whole time spent on the sleepover is relevant for the NMW.
- Accommodation: only £5.35 per day can be taken into account for NMW purposes where the employer either deducts rent from the worker’s earnings or receives money from a worker for rent.
- Training: Generally any training provided by an employer will be time worked for NMW purposes as will travel to and from the place of work to training venues.
It is understood that Sevacare entered into a written agreement with the workers setting out the average hours that the worker would likely spend working each day. For NMW purposes this would come under “unmeasured work”. Where this agreement is challenged the employer will have to show that the average hours (being 10 in this case) were a realistic figure for the role performed.
Given the principles above regarding sleepovers Sevacare may be in some difficulty showing that 10 hours of work a day was a realistic estimation.
The risks in failing to comply
Failing to comply with NMW could lead to workers taking the following action:
- Claim for unlawful deductions from wages
- Claim for breach of contract (up to six years’ back pay)
- Claim for constructive unfair dismissal
HMRC can also take the following action:
- Civil enforcement (enforcing backdated payments at current NMW rates plus a penalty of 200% of the backdated payments capped at £20,000 per worker)
- Criminal enforcement (of the organisation and/or officers of the organisation)
BIS can also include the organisation on its ‘name and shame’ list accessible by the public.HMRC can commence an investigation at any time, without providing a reason and is increasingly focusing on the care sector.
How can we help?
We have already assisted a number of organisations in the care sector with dealing with NMW issues head on. We can support your organisation throughout the process including:
- Auditing NMW compliance
- Producing compliance reports for trustees/directors
- Advising on strategy to resolve complex issues
- Managing communication exercises with trade unions/the workforce aimed at changing pay going forward while trying to limit backdated liability
- Advising on limiting future liability including contractual changes and reorganisations
- Advising on large scale settlements to settle claims for historic liability across the workforce
For further details on how we can help your organisation, or to ask any questions on the issues this case raises, please do not hesitate to get in touch.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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