Business Law & Compliance

Care sector bosses may soon need to brush up on minimum wage regulation

6 min read

27 August 2015

It seems that the cost of employing people in the care sector is only going to increase in the next few years. With that in mind, Thomson Snell & Passmore's Ben Stepney and Alison Antill discuss the basics employers need to stick to in order to comply to regulation.

In the recent Budget, George Osborne announced the creation of a new “National Living Wage” of £7.20 per hour for workers aged 25 and over from April 2016 – a sharp increase from the current National Minimum Wage (NMW) of £6.50 per hour. The care sector has reacted with concern, warning that unless funding from local government is increased, providers will struggle to maintain current staff levels and this may result in job losses.

Now we have news of an employment tribunal claim against one of the largest care providers in the UK concerning whether it has inadvertently been paying some of its employees less than the minimum wage. If the tribunal rules in favour of the employee it could lead to similar demands from thousands of care workers and give HMRC, which is responsible for investigating NMW compliance, more grounds on which to find that care sector employers have breached the NMW.

Barlow v MiHomecare

MiHomecare, a care agency with more than 30 branches across the country, is being sued by former employee Barlow for alleged failure to pay her the NMW.  Barlow was employed to look after elderly, sick or disabled people in their homes and attended an average of eight daily appointments during her four months with the company.

Although her hourly rate was £7.68 – well above the current minimum wage – MiHomecare only paid Barlow for the hours she spent giving care. She was not paid for the time spent travelling between appointments. This resulted in her often working 12 hour days, but only being paid for seven hours because travel was not paid. She claimed the travelling time should count as working time and that her employer’s failure to count this time means that she had been paid less than the NMW.

The NMW regulations

Barlow is the first employee to bring this issue to a tribunal since the new NMW regulations came into force in April 2015. Although the new regulations mainly consolidated numerous existing regulations, it did make some changes to the provisions about what counts as working time.

To calculate whether a worker has received the minimum wage, an employer needs to work out the employee’s average hourly rate by taking the total remuneration earned over the relevant pay reference period, and dividing it by the total number of hours worked over that period. 

Although Barlow was paid in excess of the minimum wage when attending appointments, if her travelling time was to count as working time, her average hourly rate would be below the minimum wage due to the large part of each working day spent on the road. 

Read more about the minimum wage:

Travel time

The NMW regulations state that for a worker who is paid by the hour (known as ‘time work’), working time consists of:

  • Time spent actually working;
  • Stand by or on-call time (subject to some exceptions and much debate);
  • Travel time; and
  • Training.

The regulations go on to state that the hours when a worker is travelling for the purposes of work are to be treated as working time. That is unless the travelling is between the worker’s home and a place of work or a place where an assignment is carried out. The regulations specifically include hours when the worker is travelling for the purpose of carrying out assignments to be carried out at different places between which the worker is obliged to travel.

If Barlow can show that each visit to a service user was an assignment and that her travelling was for the purposes of work – which on the face of it does not appear to be difficult – then she is likely to succeed on her claim. 

How much could the employer be ordered to pay?

If the employment tribunal finds that Barlow was underpaid, it can require her former employer to pay arrears to Barlow in order to make her pay up to the NMW. For other travelling care sector workers who have been employed and underpaid for much longer than Barlow, they will have the choice of claiming arrears against their employer of up to two years in an employment tribunal or up to six years in a county court.

There are many care employers who simply do not have the funds to pay carers for their travelling time. If Barlow’s claim leads to demands for travel time to be paid across the sector, it will put even more pressure on care providers’ already tight finances.

Employers of travelling care staff should start reviewing their potential exposure to this issue now and investigate how they could restructure pay for travelling staff going forwards in a manner that complies with the NMW and is affordable.

Ben Stepney is an associate solicitor, and Alison Antill is a trainee solicitor, in the employment team at Thomson Snell & Passmore.

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