Pay: living wage increases and sleep-in underpayment scheme for care employers

Autumn is traditionally the period for financial changes to be introduced. In advance of the 2017 Budget, two pay initiatives have already been released.

Voluntary living wage increases

From 6th November 2017, the voluntary living wage set by the Living Wage Foundation increased. The increased wage is only payable by those employers who have opted into the scheme, currently around 3,600 employers affecting over 150,000 employees.

The voluntary Living Wage is increasing as follows:

• The London Living Wage will be £10.20 per hour (previously £9.75 per hour).
• The UK Living Wage will be £8.75 per hour (previously £8.45 per hour).

Once rates are increased, employers have up to six months to commence paying the new rate.

The increase in voluntary living wage does not affect the statutory National Living Wage or National Minimum Wage rates. The National Living Wage, the legal minimum wage rate for workers aged 25 and over, will remain at £7.50 per hour for all eligible workers. The statutory rates are reviewed annually by the government and any increase to these rates will come in to force in April 2018.

New scheme for sleep-in underpayments launched

The Social Care Compliance Scheme (SCCS) launched on 1 November 2017. The scheme is open to social care employers who may be at risk of underpaying minimum wage to workers carrying out sleep-in shifts, or where the HMRC has already received an underpayment complaint against the employer. The scheme is an opt-in process that employers can use to make good any underpayments.

Once entered into the scheme, care employers will have a 12 month period to review their sleep-in shift payments, with assistance from HMRC. Once any underpayments are discovered, there will be a maximum of three months for the employer to pay all arrears. Where these deadlines are met, the employer will not face any further enforcement or penalties from HMRC.

Employers who decide they do not wish to partake in the scheme will not avoid enforcement action. If there is a successful HMRC investigation, employers will have to repay all arrears, pay a financial penalty of 200% of the amount owed up to a maximum of £20,000 per worker, and may be publicly ‘named and shamed’ by the government.

The new scheme is a further acknowledgement by the government that the rules around payments for sleep-in shifts are difficult to understand and poorly applied. The government has already waived penalties for underpayments made before 26 July 2017 to reduce the financial impact on care providers. This latest scheme, however, is aimed at ensuring fairness for care sector workers as it allows them to receive what they are entitled to.

The deadline to join the new scheme is 31 December 2018, with all arrears having to be repaid by 31 March 2019.