Don’t doze over sleep-over payments: National Minimum Wage penalties waiver opportunity
Don’t doze over sleep-over payments: National Minimum Wage penalties waiver opportunity
Fri 28 Jul 2017
HMRC’s programme of investigations into NMW underpayments for sleep-overs, mainly in the social care sector has featured in the news recently, leading to scrutiny of the guidance provided to employers, in particular guidance published in February 2015 and replaced in April 2017. HMRC have now officially conceded that versions of the old guidance were “potentially misleading” (officialise for wrong) and so may have contributed to employers in the social care sector failing to pay the full NMW to their employees for sleep-overs.
Employers who have been found in breach of the NMW rules are still liable to make good the lost earnings to the relevant employees but HMRC will waive penalties where the breach occurred before 27 July 2017.
The announcement appears to cover all employers’ sleep-over payments, so any employer penalised for NMW breaches on sleep-overs should seek repayment of the penalties from HMRC.
Revised guidance from the Department for Business, Energy and Industrial Strategy (BEIS), which has overall responsibility for policy on the NMW, states that penalties will not be charged where:
- “part of the underpayment is attributable to the treatment of, or arrangements concerning, time when the worker was working and was, by arrangement, permitted to sleep; and
- that part of the underpayment occurred in a pay reference period that ended before 26 July 2017.”
Additional HMRC concession for the social care sector
HMRC’s concession is to suspend enforcement activity in relation to sleep-over shifts in the social care sector (but no other) until 2 October 2017 to allow this sector to adapt. That should allow a short period of grace in which social care providers may rectify past underpayments of NMW but penalties may still be charged on underpayments:
- relating to sleep-overs on or after 27 July 2017; or
- for earlier periods where the employer fails to correct the errors before 3 October 2017.
But this isn’t all good news for some: only employers who make good their NMW arrears will have a chance of taking advantage of the penalty relaxation, and while the NMW arrears may be less than the penalties (200% of the unpaid NMW), finding the money to clear the arrears may cause cashflow difficulties.
Mazars can provide a comprehensive service to deal with all these issues: contact Vaneeta Khurana – Vaneeta.Khurana@mazars.co.uk or your local Mazars Employment Tax or Tax Investigations specialist.
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