In the fourth part of our series on contract management pitfalls, we look at the risks arising out of varying the terms of construction contracts.
Faced with spending cuts, local authorities have used their purchasing power to drive down prices for care services. This presents charities with a dilemma as they seek to pay care workers a living wage while delivering cost-effective services. For some, this means taking the difficult decision to withdraw from delivering services because the payment offered would not fund care services of a type and quality consistent with the charity’s aims. Others must find ways to deliver a sustainable service.
Achieving sustainability may mean redesigning the service. For example, innovative social care charity Real Life Options (‘RLO’) has achieved real successes using assistive technology to reduce the cost of caring for the disabled people it supports. In two test sites, a residential home and a supporting living service, the application of technology and resulting redeployment of staff reduced annual costs, allowing RLO to return a six-figure saving to the commissioning authority without job losses. The redesign also enabled people using the services to tailor them to suit their needs and aspirations more closely.
RLO is evaluating these results in detail in a project known as the Transformation of Residential Care Homes (ToRCH). Initial results suggest appropriate personal technology can deliver both cost savings and enhanced quality of life.
In other cases it will be necessary to wrestle with the complexities of the National Minimum Wage (“NMW”). While there is increasing recognition of the extremely difficult conditions for voluntary sector care providers, individual employers remain responsible for complying with the National Minimum Wage Regulations. HMRC can conduct impromptu inspections at any time, and are doing so with increasing frequency in the social care sector.
The penalty for non-compliance is 100% of the total underpayment with a minimum penalty of £100 and a maximum of £20,000. The Government intends to increase that to £20,000 per individual worker concerned. Individuals can also bring claims in the Employment Tribunal for failure to pay the NMW.
The NMW is a complex area of law which is often made harder to apply by conflicting case law. Any organisation employing staff must ensure that their senior management team understands the NMW and ensure the organisation is compliant. Charities delivering health and social care services face particular difficulties because of the number of relatively low paid staff they employ.
Three areas worth reviewing are:
- allowances and contractual benefits;
- travel time, and
- ‘sleep in’ shifts and ‘on call’ duties.
Allowances and Benefits
Payments that do not count towards the NMW include:
- Enhancements for overtime or shift work, (unless the member of staff receives different rates for different jobs).
- Allowances or payments that are not attributable to the employee’s performance, such as London weighting or on-call allowances.
- Expenses or allowances involving the repayment of money spent in connection with the job, for example to cover the cost of uniforms. If, for example, travel expenses are not paid, then these expenses incurred by a worker are deducted from pay for NMW purposes.
- Benefits in kind, whether or not they have a monetary value, for example, vouchers.
Travel time will usually fall within one of two categories:
- Time spent travelling between home and a worker's normal place of work and back, which will not count as time worked for NMW purposes; and
- Time spent travelling on business, which will count as time worked. Time spent travelling on business includes time when the worker is:
- required to travel in connection with their work by a mode of transport or is making a journey on foot;
- waiting at the place of departure to begin the journey or waiting for the journey to recommence;
- travelling from one place of work/work assignment to another;
- waiting at the end of a journey; and
- travelling from work to training venues (travel between the workers home and the training venue does not count).
‘Sleep ins’ and On Call Duties
Time when the worker is available at or near their place of work for the purpose of doing work will generally count unless limited exceptions apply. Recent case law including the Whittlestone case suggests that employees who carry out time work, will be working for the purposes of the NMW when carrying out sleep-in shifts or on-call duties when they are restricted in where they can go or what they can do during that time.
This may not be the case however if the worker is undertaking unmeasured work and the case law suggests that in those circumstances only the time when the worker is actually carrying out their contractual duties will count. Paying a flat rate based on the market rate and/or the complexity of the work may help show the work is unmeasured work. Employers who wish to argue sleep-in and on call arrangements amount to unmeasured work will need to ensure they define clearly when staff are required to be working and when they are simply ‘on call’ and consider using daily average agreements.
For more information
This article was first written for Charity Finance magazine, September 2014.
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