Care sector threatened with fines and labelled 'high risk' for failing to pay care workers National Minimum Wage

Care providers’ failure to pay their employees the National Minimum Wage ‘remains a concern’ says the National Audit Office, which warned that those who do not will face sanctions.

The Government spending watchdog has published the report ‘Ensuring employers comply with National Minimum Wage regulations’ and has singled out the social care sector as a consistent culprit revealing that the Low Pay Commission continues to assess it as ‘high risk’.

The Low Pay Commission has previously reported that around 11 per cent of care workers are not paid the National Minimum Wage, which equates to over 200,000 people.

The Department for Business, Innovation and Skills (BIS) re-classified the social care sector as a high priority sector for 2015-16, meaning that any complaints about low pay in the care sector are fast-tracked.

The report states: ‘In the period from 1 April 2015 to December 2015, HMRC closed 172 investigations into the care sector, 91 of which were aged less than 120 working days, and is currently investigating a further 141 employers comprising 107 complaints and 34 proactive risk-based investigations.’

Both residential care providers and home care providers have been found to be at fault.

Penrose Care 'deeply concerned'

Robert Stephenson-Padron, managing director of Penrose Care, which is one of just a handful of Accredited Living Wage Employers in the home care sector and a vocal campaigner against low pay, is not surprised by the report’s findings.

He said: “Penrose Care has long been deeply concerned with widespread non-compliance with the National Minimum Wage in the home care sector. This is why we raised a complaint to the House of Commons Public Accounts Committee in January 2014, a complaint that the then-Chair Hodge referred to the National Audit Office. Penrose Care believes minimum wage compliance is morally right for workers and essential to ensuring a fair competing field among social care providers.”

'Happy staff make happy residents'

Natasha Singarayer, chief executive of the Abbeyfield Society, which also pays its care workers the Living Wage currently set at £8.25 an hour (a voluntary rate set independently and updated annually) believes it is crucial to pay staff over the National Minimum Wage as she says "happy staff make happy residents".

“That is why becoming the first national care provider to pay the ‘real’ Living Wage back in April 2014 was a no-brainer for us. Yes, it has added to our costs but is already reaping rewards in terms of staff satisfaction and lower turnover rates. For all those care organisations who think they can’t afford the Living Wage, I say you can’t afford NOT to pay it.”

Des Kelly is similarly adamant that care providers need to be paying its staff at least the National Minimum Wage, saying: “The National Care Forum is fully committed to all staff within the care sector being appropriately rewarded. The NCF therefore welcomed the introduction of the National Living Wage(NLW), which is now law. There can be no justification for care providers paying below the rate of the NLW. We support HMRC taking a zero tolerance approach and using their powers to prosecute any such care providers.”

'Care providers cannot pay what they don't have'

However Martin Green, chief executive of Care England, which represents care homes, blames non-compliance on the poor fee levels paid by local authorities for people's care.

He said: “Care providers cannot pay what they don't have, and in the last year we have seen Government impose cost increases, such as the new living wage, with the introduction of auto enrolment of pensions, and huge increases in regulation costs.

“About 60 per cent of local authorities, have not indicated to care providers what the fee levels will be for this year, and in some areas, despite having raised the two per cent Precept on their council tax bills, local authorities have imposed a 0 per cent increase on last year's fees.

“The only people who do not seem to be “stepping up” to the challenge of the new living wage are the Government themselves. Instead of spending huge amounts of taxpayers money on glossy adverts, Government ministers would do well to put the money into the care system.”

National Audit Office

Amyas Morse, head of the National Audit Office, said: “With the implementation of the National Living Wage, it is even more important that the Government ensures its compliance programme reflects the changing risks within the labour market, and maintains its progress in ensuring all employers pay the minimum wage. The Government also needs to reduce the time it takes to investigate complaints and resolve cases.”

The main causes for non-compliance by home care providers are unpaid training time, unpaid travelling time between appointments, hourly rate below National Minimum Wage rate, incorrect use of apprentice rates, localised and franchised contractual arrangements and failure to pay workers for all working time.

For residential care, the main causes are unpaid training time, hourly pay rate below National Minimum Wage rate, a lack of awareness of the accommodation offset rules and their effect on National Minimum Wage pay calculations and incorrect use of apprentice rate.

Pressures on care sector

In April the Government introduced the National Living Wage of £7.20 an hour for all working people aged 25 and over. The adult National Minimum Wage is currently £6.70 per hour.

This was viewed by some in the care sector as unsustainable with Martin Green, the chief executive of Care England, warning that “without adequate funding to pay for the national living wage, the care sector is at serious risk of catastrophic collapse.”

Colin Angel, policy and campaigns director at the UK Homecare Association, which represents domiciliary care providers, added that “without urgent action from Government and local councils to address the deficit in funding, continued supply of state-funded homecare will become unviable at a time when Government looks to social care services to support an over-stretched NHS, particularly supporting people to leave hospital promptly”.

These predictions could well become reality with care providers such as Four Seasons and Care UK hitting the media spotlight in recent weeks due to the financial pressures they are under.