Minimum wages and healthcare providers – key developments and practical points

 Following on from the introduction of the 'national living wage' in April 2016 and a renewed focus on minimum wage compliance in the healthcare sector, Jodie Sinclair from Bevan Brittan looks at the MiHomecare case and explains key practical points on some of the trickier issues, and risks, around minimum wage/'living wage' requirements. 

Travel between appointments
It has been reported in the press recently that, following an HMRC investigation and employment tribunal proceedings, one of the biggest providers of homecare in the UK, MiHomecare, has entered into settlement arrangements for non-payment of the minimum wage in respect of travel time between appointments. We understand that the company has undertaken a review of pay arrangements and is now minimum wage compliant, with all underpaid staff being reimbursed.  Although this case was settled before a full hearing, it suggests that HMRC will interpret minimum wage legislation as meaning that workers should be paid the minimum wage for time spent travelling between appointments.
So far, so clear. But what is the position if workers are travelling between appointments and this also incorporates some rest time – for example, if an appointment finishes early and the worker is able to take a longer lunch? Again, this will come down to the interpretation of the regulations, but it is likely that such time should still be included in National Minimum Wage (NMW) and National Living Wage (NLW) calculations, in line with BIS guidance.    
Travel between home and appointments
Contrast, however, the position in relation to minimum wage calculations and travel between:
  • Home and the first appointment of the day, and
  • The return journey home after the last appointment of the day.
This time is unlikely to be counted as working time for the purpose of calculating minimum wages (in accordance with BIS guidance and NMW Regulation 34.) 
However, last year's Spanish case on working time (Federacion de Servicios Privados del sindicato Comisiones Obreras v Tyco Integrated Security)  established that for the purposes of the Working Time Regulations (WTR), travel from home to the first appointment of the day, and the journey home from the last appointment, should be counted as working time. Does this mean that employees are entitled to be paid for this time? No: the WTR and NMW regulations are separate – but it may be that employees will attempt to challenge this position, perhaps arguing that it is unworkable to have two parallel but different categories of working time: travel time that 'counts' as work under the WTR but does not 'count' as work for minimum wage purposes.
Focus on compliance
It is clear that there is a renewed focus on compliance with minimum wage obligations general, and particularly in the healthcare sector.
·         UNISON published a report in March 2016 called 'Calling Time on Illegal Wages in the Homecare Sector' and is also calling for increased reporting, inspection and transparency on minimum wage payments when local authorities commission care.   
·         Employers' implementation of the NLW was debated in Parliament in April, with Nick Boles MP saying that he expects employers to comply with both the 'spirit' and letter of the law on the National Living Wage.
·         It has also been announced in parliamentary debate that the government is increasing spending on minimum wage enforcement.
What are the risks of non-compliance?
The main source of enforcement action is HMRC, which can carry out inspections at any time, without warning or reason. A 'penalty notice' of 100% of the total of any underpayment applies (reduced by 50% if paid) within 14 days. If an employer fails to comply with an underpayment, then civil and criminal proceedings may be brought. BIS also have the power to publicly 'name and shame' underpaying employers. A worker who does not receive the NMW/NLW may bring employment tribunal proceedings.
Further advice
We have been advising clients on preparing for, and implementing, contractual changes to accommodate the NLW and we are regularly advising clients on responding to HMRC wages investigations. Please do contact me for further information.
Jodie Sinclair
Bevan Brittan
Movement to Work, a collaboration of UK employers that aims to tackle youth unemployment
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