Social care compliance scheme
The scheme was launched on 1 November to address the challenge facing the care sector following the EAT’s ruling about working time and sleep-overs. Links to my previous pieces on this topic are here:
In essence the sector is directed to resolve the issue itself but it’s offered the SCCS as a stop-gap measure. Key features of the SCCS are that employers who join the scheme and co-operate with HMRC will be required to review their compliance with the minimum wage and pay any arrears that might be found to be owing to workers. They’ll be given until 31 March 2019 to pay arrears. In return, employers will not be subject to a formal HMRC investigation, they’ll be spared financial penalties for previous non-compliance and will not be subject to the naming process.
The current financial penalty is 200% of the arrears capped at £20,000 per worker, though the government has waived penalties for underpayments before 26 July 2017.
The benefits of joining the scheme are significant and demand serious consideration, particularly by charitable institutions. However there are issues in play which suggest that joining the scheme is not quite as straightforward a decision as it might appear.
The EAT’s judgement is subject to an appeal which is due to be heard in March next year so there’s a case for arguing that payments and penalties should be stayed pending the appeal. The SCCS doesn’t address this so there’s uncertainty about what’ll happen if arrears are paid then the appeal is allowed. I can’t see workers being required (or able) to repay their employers, and what about the tax & NIC on the arrears that’ll have been paid to HMRC? There’s also some uncertainty about how far back employers must go in calculating and paying arrears. Conventional wisdom points to the contractual limitation period of 6 years but until February 2015 the Government’s view was that time spent asleep is not working time. Indeed, I understand this remained HMRC’s internal guidance until March 2016. Are employers required to pay arrears in respect of periods when the prevailing view of the enforcement authority was that they weren’t liable?
My point is that joining the SCCS is far from being the “no brainer” it might seem at first glance. Simon, Kathryn and I have the experience to help organisations plot a course through these turbulent waters and are happy to help.