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Mencap and the Social Care Compliance Scheme (SCCS)

Mencap and the Social Care Compliance Scheme (SCCS)

The lack of HMRC guidance on what the Mencap decision means for the SCCS may cause confusion for employers – this is what they need to know

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What the Mencap decision means for the SCCS

The SCCS allows employers in the care sector to settle outstanding National Minimum Wage (NMW) underpayments without penalties or publicity.

Employers who have signed up to the scheme must:

  • Declare NMW underpayments relating to sleep-in shifts by 31 December 2018 and make good underpayments by 31 March 2019 (or, if earlier,12 months after signing up to the SCCS); and
  • Review NMW compliance in all other areas and make good to workers any other identified underpayments prior to submitting that declaration to HMRC.

However, in its decision on the Mencap appeal, the Court of Appeal unexpectedly ruled that time spent sleeping was not working time for NMW purposes.

Although Unison is seeking permission to appeal the decision to the Supreme Court, as things stand employers whose sleep-in arrangements sit on all fours with the facts in Mencap, will not need to pay for time sleeping during a sleep-in shift.

Despite the ruling, HMRC has confirmed it intends to leave the SCCS open.

This means that employers who signed up to the scheme will still need to submit a declaration before 31 December 2018.

What should employers do?

This submission is likely to trigger a review by HMRC, who will seek to confirm either that there are no underpayments, or that any underpayments were made good to employees prior to the submission of the declaration.

Whilst each organisation will be at a different stage of reviewing its NMW compliance, the likelihood of an HMRC review being opened means it is important that all employers review their NMW compliance prior to submitting their SCCS declaration.

Issues identified by some care providers during the course of reviews include:

  • Failing to capture all working time for payment (e.g. travel time, working through breaks, waiting time before and after the start and end of shifts);
  • Incorrectly including allowances in NMW pay that should be excluded (e.g. payments for personal inconvenience and shift premiums);
  • Smoothing pay across pay periods for workers who are paid according to time worked, so that payments are not correctly aligned to the pay period in which the hours are worked; and
  • Not taking into account expenses and other deductions that reduce NMW pay during the payroll process (e.g. payments for work dress - such as black shoes - or locker key deposits).

How KPMG can help

KPMG can assist care providers who have subscribed to the SCCS to review and confirm their NMW compliance prior to making the necessary declaration before the end of the year.

If you have any queries, please get in touch with your normal contact or e-mail employersclub@kpmg.co.uk.

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