Social Care Compliance Scheme to continue despite Mencap decision

HM Revenue and Customs (HMRC) has notified employers that the social care compliance scheme (SCCS) will continue unchanged, despite last month's Court of Appeal judgment backing the approach to overnight pay historically taken by most care providers.

"Given the significance of the Mencap decision, in which the Court of Appeal effectively turned the approach to paying for sleep-in shifts on its head, it is surprising that HMRC is adopting a 'status quo' approach in this way," said employment law expert Matt McDonald of Pinsent Masons, the law firm behind Out-Law.com.

"It may be that HMRC is adopting a wait-and-see approach, given Unison's indication that they intend to appeal the Mencap decision, but it is an odd approach nonetheless. A suspension of the scheme would have been the more obvious approach in the circumstances," he said.

Residential care workers have historically been paid a fixed fee, which usually worked out as below the NMW, for 'sleep-in' night shifts during which they were on call. In 2015, in a case brought by the Unison trade union against disability charity Mencap, an HMRC tribunal ruled that 'sleep-in' workers must instead be paid the NMW for the hours they are on the site. This followed a significant line of previous case law where the same conclusion had been reached.

HMRC began inviting care home providers to participate in the SCCS in November 2017. Providers which opt in to the scheme have a period of 12 months to identify and repay any wage arrears to workers with support from HMRC. Any arrears paid out under the scheme must be fully repaid by 31 March 2019. Employers who chose not to opt into the scheme were warned that they would be subject to HMRC's usual NMW enforcement procedures.

Last month, the Court of Appeal overturned the tribunal's decision in the Mencap case. In its judgment, the Court of Appeal drew a distinction between actual work and time available for work, backing the historical approach taken by most care home operators. Unison has applied to the Supreme Court for permission to appeal.

In its letter to operators, HMRC said that it had "decided that it is appropriate to continue to operate" the SCCS without any further explanation for this. All original time frames and requirements of the scheme remain in place, as does the potential for HMRC to open an investigation into the pay practices of employers that choose not to opt in to the scheme or which decide to withdraw from the scheme following the judgment in the Unison case.

The HMRC letter refers to new guidance on calculating the NMW, which is currently being developed by the government's Department for Business, Energy and Industrial Strategy (BEIS). Updates to the SCCS will be made "once the revised [guidance] is available", it said.