Sleep-in calculations keep care sector up at night
If you’ve not heard of sleep-ins and don’t know what it means, there is some good detail in this Independent article: Social care sector given deadline to settle £400m bill for ‘sleep-in’ carers back pay. It really grabbed our attention because it relates to an issue we have been solving for our clients in the sector.
What are sleep-ins?
Sleep-in arrangements are common in the care sector.
- Care workers stay overnight at a client’s address in case they are needed during the night.
- The worker gets paid a flat rate to compensate them for sleeping there.
- If they have to get up during the night, they get paid for the hours they work.
What Is The Problem With Sleep-in Pay?
In a nutshell, the background to this story goes back to 1999, when rules were set for a flat rate of £25-£35 to be paid to care workers who stayed overnight at a service user’s home.
However, following two tribunal cases in 2015, the pay guidance was clarified to state for the purposes of National Minimum Wage (NMW), “hours worked” must include the hours asleep. Because a sleep-in shift might typically last around from 8 to 10 hours, the net effect of this ruling is the dilution of hourly rate in NMW calculations. Often hourly rates in the sector are close to the NMW already, meaning that it is highly likely employers will be deemed to have failed to comply with NMW regulations.
What Are The Implications Of Changes To Sleep-in Rules For The Care Sector?
At time of writing cases and appeals continue to proceed through the courts so the implications are unclear. The government has pushed back a decision on new rules pending the outcome of these cases. It seems likely that employers will be required to top up wages on a monthly basis where rates are deemed to fall below NMW.
It seems unlikely that fines will be issued for non-compliance prior to the rulings because previous advice on the calculation conflicts with the ruling. However, it is possible that top-up payments may have to be backdated for up to six years. This puts both a financial burden and administrative burden on the sector, raising concerns about sustainability and fears of collapse.
Who Will Pay For Backdated Sleep-ins?
It’s not clear whether there will be an obligation to make back payments and who will pick up the tab. There have been calls for the government to provide support to the care sector although there is resistance to these demands.
Many cares services are funded by local authorities and often the sleep-in rate was specified in tender documentation. In these cases, whilst the immediate burden may hit suppliers, the ultimate responsibility seems likely to sit with councils.
Why Are Sleep-ins An Administrative Nightmare?
There are potentially two different sets of complex calculations required. The month to month NMW “top-up” calculation and potentially 6 years of monthly backdated calculations. Few payroll systems have the functionality built in to handle these.
The government has set up the Social Care Compliance Scheme (SCCS) to provide HMRC support in identifying employees who are entitled to outstanding wages. The deadline for repayment has been extended for another year, with March 2019 the new deadline for reimbursement. While this grace period will help provide some breathing space, it is still a daunting prospect for many care organisations.
Help performing sleep-in calculations for NMW
At OnlyExcel, our expert Excel consultants have helped some of the largest care providers in the UK with this very problem. With thousands of employees, the task faced by the payroll teams was massive. With each provider we explored the sleep-in challenge, assessed the available outputs from their current systems. We worked closely with finance staff to create bespoke, highly efficient systems and processes to meet that challenge head on. The resultant systems enable the team to swiftly identify which care workers are eligible for a top-up and how much. Payments are split by cost centre, keeping their books in order and turning a potential dog’s dinner a digital piece of cake.
Going forward, it’s likely that to get existing systems up to speed, organisations will need to adapt to new payroll procedures. Again, current software may simply not be able to cope. OnlyExcel can help support the transition to new payroll practices by creating an interim solution that will save a lot of blood, sweat and tears while incumbent payroll systems play catch-up.
The sleep-in hourly rate issue affects the professional care sector, connected charities, local authorities and private care. If you are struggling to tackle employee backdated pay or need to future proof your payroll, get in touch. We can’t cure everything, but we can save your payroll team from one very big headache.
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