Commissioning and National Minimum Wage Colin Angel, Policy - - PowerPoint PPT Presentation

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Jan 13, 2024 399 likes •714 views

The professional association for homecare providers Commissioning and National Minimum Wage Colin Angel, Policy Director @ ukhca @ colintwangel Whats happening with commissioning Continued downward pressure on rates Use of

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@colintwangel @ukhca

The professional association for homecare providers

Commissioning and National Minimum Wage

Colin Angel, Policy Director

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@colintwangel @ukhca

What’s happening with commissioning

 Continued downward pressure on rates  Use of unsustainable maximum prices in tenders  Impact of travel time:

 15-minute visits are 14-16% of all purchase

 Polarisation in local markets:

 Either: reduced numbers of “approved providers”  Or: Volume fragmented across large framework agreements

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@colintwangel @ukhca

Directors of Adult Social Services predict…

 Increased unmet care needs  More legal challenges  Providers in financial difficulty  Reduced ability to ease pressures on health

Source: ADASS Budget Survey 2014

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@colintwangel @ukhca

Issues for the homecare sector

 Workers’ terms & conditions:

 HMRC report on National Minimum Wage compliance  High use of zero-hours contracts

 Worker recruitment:

 Ability to recruit workers  Costs of implementing “Care Certificate” (Cavendish)

 Public perception:

 Adverse media coverage over quality

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@colintwangel @ukhca

Why National Minimum Wage is in focus

 Increased investigations by HMRC triggered by:

 Workers contacting the Pay and Work Rights Helpline  Intelligence about non-compliance from 3rd parties  Risk-based assessment of providers by HMRC

 Increasing media attention:

 Alleged non-payment of careworkers’ travel time  HMRC report – November 2013  Provider told to repay >£600k arrears to almost 3,000 workers  Recent publicity on zero-hours contracts

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@colintwangel @ukhca

Why is NMW-compliance so important?

 Scrutiny by HMRC is intensive and time-consuming:

 Possibly 2+ years of scrutiny and uncertainty

 Commercial damage if found non-compliant:

 Repayment of arrears to workers at current rates  Fines of 50% or 100% of arrears (min: £100, max: £20k)  New rules to “name and shame” offenders in public

 Reputation of entire homecare sector at risk

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@colintwangel @ukhca

HMRC’s investigations of 224 social care providers (2011-13)

Non-compliance averages 45%

52% 33%

Residential Homecare Under-payment averages £139/worker

£153 £70

Residential Homecare

HMRC (2013) National Minimum Wage Compliance in the Social Care Sector

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@colintwangel @ukhca

Reason(s) for NMW non-compliance in the homecare sector 19 12 2 1 1

Unpaid working time Deductions from pay Work related expenses Hourly rates below NMW Apprentice rates

HMRC (2013) National Minimum Wage Compliance in the Social Care Sector

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@colintwangel @ukhca

Minimum Wage: What you need to know

 NMW compliance is the employers’ responsibility  The fact that most councils pay low rates solely for “contact

time” is not a defence for breaking the law

 It is what happens in practice that counts (not what your

rotas claim should have happened)

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@colintwangel @ukhca

And now for a disclaimer…

 This presentation is designed to help employers understand

the underlying concepts of the National Minimum Wage

 It focuses on issues which affect homecare providers  It does not constitute a definitive explanation of the law  It is not a substitute for taking appropriate legal advice

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@colintwangel @ukhca

Total working time

+

Minimum Wage compliance

(Highly simplified)

Basic rate(s) of pay are used. Do not rely on unsocial hours premiums

r enhancements for short visits

to achieve compliance with NMW Average pay

ver reference

period of up to 1 month

Total pay before enhancements

Total contact time Travel time + Training

>=£6.50

Time spent providing care in the service user’s home Includes: Travel between visits and time spent on training approved by the employer Excludes: Journeys to and from worker’s home and other ‘non-working’ time

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@colintwangel @ukhca

Minimum Wage non-compliance: The risk factors

 Low rates:

 Basic rates around £6.50/hour  Relying on enhancements for short visits/unsocial hours  Not changing rates for younger workers on their birthday

 Payment for “contact time” only, especially with:

 Large amount of travel time, relative to “contact time”  Use of very short visits and/or long gaps between them

 Other issues:

 Insufficient record-keeping (eg. travel time)  Deductions for uniforms or accommodation provided

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@colintwangel @ukhca

Know your pay reference period

 The “pay reference period” is the same as your

payroll period:



Eg. weekly, fortnightly or monthly

 However, it cannot be more than monthly

 Remember that NMW compliance is based on average pay

 Don’t worry too much about what is paid for each hour worked,

r each individual visit

 Focus on average pay per hour over the reference period

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@colintwangel @ukhca

Understand which pay rates count towards NMW

 It is the lowest hourly rate paid during the reference

period which counts for NMW compliance

 For most workers this will be the 1-hour week-day daytime rate

 Don’t try to achieve compliance by relying on:

 Enhancements for unsocial hours, weekends or public holidays  Enhancements paid for short visits  Allowances (London weighting, car allowance) or expenses

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@colintwangel @ukhca

Why enhancements and allowances are excluded from calculations

 It is a fundamental principle of the Regulations that a

worker’s basic rate of pay, before enhancements or other allowances, should not fall below the statutory NMW rate in any given pay reference period

 The payment of premium rates can conceal the fact that,

after premium rate elements of pay are deducted and any unpaid working time added, a worker’s actual rate of pay could be below NMW

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@colintwangel @ukhca

Understand “working time”

(Highly simplified)

 Working time includes time when the worker is:

 Delivering care (“contact time”)  Travelling in connection with their work (by whatever means of transport)  Waiting to begin a journey, or begin an assignment on arrival  Undertaking training or supervision

 Working time excludes:

 Authorised rest breaks  Time spent travelling between home and a worker's normal place of work (or training) and back home again

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@colintwangel @ukhca

Cautions about travel time

If you have to quibble about what does and doesn’t count as travel time in order to achieve NMW, you are a significant risk of non-compliance. Adopting a restricted interpretation of travel time is counter-productive. It may make you feel better, but won’t help if HMRC are investigating.

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@colintwangel @ukhca

Payment of travel costs

 HMRC can deduct travel costs from total pay if they aren’t

reimbursed by the employer

 Sadly, travel costs which are reimbursed don’t increase

total pay for NMW purposes

 Recommendation:

 Make a reasonable contribution towards mileage (cover at least petrol costs)  Pay standard class tickets/fares at face value  Don’t rely on mileage rates to achieve NMW-compliance

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@colintwangel @ukhca

Also note

 Certain deductions from wages may bring providers into

non-compliance, including:

 Re-payment of uniform costs  Trying to re-claim training costs  But repayments for DBS checks are OK

 Costs of accommodation provided by the employer:

 There are specific rules for the “accommodation offset”

 Lower rates for apprentices and younger workers

 Be careful to adjust rates as soon as they no longer apply

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@colintwangel @ukhca

Identify the different types of work your staff undertake

Distinguish between four different types of work:

 Time Work:

Mostly hourly paid careworkers

 Salaried Work:

Mostly office staff

 Output Work:

Unlikely to apply in homecare

 Unmeasured Work: Mostly “live-in” careworkers

This is important because it affects how NMW compliance is calculated (esp. sleep-ins)

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@colintwangel @ukhca

UKHCA’s NMW Toolkit

Free resource for UKHCA members

 Based on HMRC documents, obtained

under FOI

 3 main sections:

 How NMW works in complexity of homecare services  How to audit compliance (individuals & samples of workers)  Suggested actions to achieve/improve compliance

www.ukhca.co.uk/downloads.aspx?ID=422

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@colintwangel @ukhca

Assessing your compliance with National Minimum Wage

 If you can’t assess all workers, at least do a sample:

 Repeat regularly, particularly if your pay rates are low  Select workers who are most at risk of underpayment  Be especially careful after NMW increases in October  Keep records of your samples, in case you need for HMRC  UKHCA’s Toolkit explains how to do this in detail

 If you find non-compliance:

 Correct underpayment & do more sampling

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@colintwangel @ukhca

Some suggestions to help maintain (or achieve) compliance

 Good employee relations:

 Explain how workers’ pay is calculated properly  Take questions about underpayment of NMW seriously

 Address travel time and travel costs:

 Efficient rostering; consider use of route optimisation software  Check your assumptions for travel time are accurate  Reimburse reasonable travel costs (if you don’t already)

 Change rates of pay:

 Increase basic rates, even if that means paying a flat rate  Pay workers for induction, training and supervision

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@colintwangel @ukhca

UKHCA’s Minimum Price

(February 2014)

 BBC Radio 4 finds:

 97 of 101 councils pay prices below £15.19/hr  Average minimum rate £12.26/hr

 BBC coverage on:

 Breakfast  News Channel  Radio 4 & 5-Live  Local Radio

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@colintwangel @ukhca

Principles behind our Minimum Price

 Fees calculated solely by reference to “contact time”  Workers receive flat-rate NMW for all “working time”

 Contact time  Applicable travel time (and reasonable travel costs)  Supervision and training

 Provider can cover:

 NI, pensions, training and holiday pay  Reasonable operating costs  Acceptable profit / surplus

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@colintwangel @ukhca

How UKHCA’s minimum price is calculated

Contact time £6.50

Travel time £1.24 Travel costs £1.40

Pension, training, holiday, NI £1.88

Running the business £4.25 Profit / surplus £0.46

Minimum Wage: £6.50 Travel time/hour: 11.4 min Travel distance: 4.0 miles Mileage rate: £0.35/mile National Insurance: 9.5% Holiday Pay: 12.07% Training time: 1.73% Pensions: 1% Gross margin: 30%

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@colintwangel @ukhca

How can you use UKHCA’s Minimum Price?

 Support discussion with local

commissioners

 Send to local councillors

asking why council is paying below UKHCA’s rate

 Use UKHCA’s Costing Model

to calculate your actual costs

 www.ukhca.co.uk/CostingModel

 Challenge council to open-

book costing exercise

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@colintwangel @ukhca

Links to essential information

BIS: Calculating the Minimum Wage

General advice. Basic, but a good introduction to general issues www.gov.uk/government/publications/calculating-the-minimum-wage

UKHCA: National Minimum Wage Toolkit (UKHCA members only)

Specialist advice for compliance for homecare providers www.ukhca.co.uk/downloads.aspx?ID=422

UKHCA: Minimum Price for Homecare

Explains all assumptions used in UKHCA’s £15.74/hour www.ukhca.co.uk/downloads.aspx?ID=434

UKHCA: Costing Model

Calculates price based on providers’ actual costs www.ukhca.co.uk/CostingModel

HMRC: National Minimum Wage compliance in the social care sector

www.gov.uk/government/uploads/system/uploads/attachment_data/file/262269/131125 _Social_Care_Evaluation_2013_ReportNov2013PDF.PDF

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