This latest document from HMRC amongst other things highlights the following key points:

  • The current NMW enforcement suspension will end within one month (by the end of October 2017). This is consistent with what we understand has been confirmed to sector lobbying groups during the latest meeting with the Government and the Department for Business, Energy and Industrial Strategy (BEIS).
  • An “Interim enforcement approach” appears to be proposed, although the Q&A document does not set out what this means. It does suggest, however, that the approach is designed to protect workers arrears, but also to protect existing jobs and the continuity of service provision in the sector. We read this as HMRC recognising the potential funding issue in particular, in light of comments made further on in the document. The document later comments that “It is in the interest of providers, workers and recipients of care services to have a stable, functioning care sector” and that the current suspension “is necessary while further work is completed on what other support is necessary for the sector”.

    Further, the document confirms that “The Government recognises the pressures these liabilities are placing on providers of social care, and the Government is exploring options to minimise any impact on the sector”. It also confirms “The decision to offer any Government support to private organisations will always need to be made on the basis of a strong understanding of the market and a clear justification for action, based on need and value for money considerations.”

    We understand that sector lobbying groups have been informed that the Government still feels it needs stronger evidence of the impact on the sector of the back-pay liability and, in fact, no decisions have been made as to whether the Government will fund any liability either in full or partly. Additionally, the Government is of the view that it could be required to satisfy EU state-aid rules on support for private organisations, and that any negotiations with the European Commission on state aid could take between 6 and 18 months to complete. It is unclear how these timescales will work with the HMRC’s intention to resume its enforcement action.

  • The Government will not offer support to those who have already been issued with notices of underpayment and ordered to pay arrears or financial penalties.
  • There is a strong suggestion that workers will be able to recover arrears of pay for sleep in shifts where underpayments have been made, and it also confirms that the Government remains fully committed to the “strong enforcement of NMW rules”. It will be interesting to see, however, how HMRC will assess whether any historical underpayments have been made in light of the document again confirming that it recognises that Government guidance (i.e. the BEIS Guidance) published in February 2015 was misleading.
  • Suggestions are that new guidelines will be published next month and it will be interesting to see whether there are changes to the current BEIS Guide or issuing of new guidance on sleep-ins.
  • The document directly asks the question “How will workers be compensated for lost arrears as the 6-year limitation kicks in?” and in response states “This is a difficult balancing act. The regulations provide that up to 6 years’ worth of arrears should be repaid by employers at the current NMW rate.” It then, however, reads: “There will be workers, as it is not in the interests of workers or, indeed, service users for providers to go out of business”. This sentence is clearly not complete and does not make sense, making it difficult to understand what is meant, but it appears that something important is missing.

To request a copy of the HMRC’s “Sleep-ins announcement Q&A” document, please contact Lynsey.Harrison@anthonycollins.com.

For more information

For more information on the National Minimum Wage compliance, please get in touch with your usual contact in our employment team or speak to Anna Dabek or Matthew Wort. You can find out more about our employment work on our website.

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