Care homes should seek support to avoid NMW breaches

The backdrop of financial pressures

Many publicly funded care homes are already operating with squeezed margins due to cuts in local authority funding and higher staffing and other costs. Staffing costs typically account for between 45 and 60 per cent of their overall costs.

To ease their financial pressures and mitigate the risk of breaching NMW legislation, publicly funded care homes need to present a strong case for more support to their local authority or NHS Commissioners (Commissioners). Whilst many providers aspire to paying staff the Real Living Wage, which is more than the NMW, to attract and retain talent and improve service quality, they need the support of their Commissioner to do so. Without this support, some providers will have no choice but to cease operating.

What risks do employers face?

Many publicly funded care homes feel that they are operating on a financial knife edge and the risk of breaching the NMW legislation is increasing. For example, employees training for NVQs or other professional qualifications in their own time could see their overall pay drop below the NMW. Whilst there is a special NMW for apprentices, care homes may not realise that it only applies as part of a formal apprenticeship agreement to those aged between 16 and 18 years, or employees in their first year of study.

Other risks that could pose a risk of NMW non-compliance include:

• A requirement for workers to pay for their own uniform.
• Charging workers a fee of £1 for an attachment of earning order.
• A salary sacrifice scheme where contributions such as pension scheme and/or childcare vouchers are deducted from staff’s pay.
• If workers are ‘on call’ over a weekend, without certainty of their hours; this could mean that they can’t be categorised as a salaried worker and push their pay for that week below the NMW.
• If a care home deducts more than £9.88 per day to cover accommodation for an overseas worker.

Even employers with relatively strong back-office support could inadvertently find themselves in breach of NMW legislation, which could lead to them being named and shamed on a government website.

What are the solutions at hand?

Care homes and other adult social care providers cannot afford to leave any compliance matter to chance, so seeking specialist advice in all areas of human resources management is a crucial first step. When negotiating with Commissioners, as well as reminding them of their statutory obligations under the Care Act, they should consider sharing their goals to increase pay, attract and retain skilled workers and commit to delivering high-quality services.

A national framework for social care services’ pay could help to ease pressure on providers moving forward and if this was made a legislative requirement, Commissioners would have to provide the necessary funding. National pay bargaining is another potential solution, but this may not be feasible in a sector with many independent providers.  

Key takeaways

As publicly funded care homes seek to manage their financial pressures and mitigate the risk of non-compliance, it is essential they communicate proactively with their local authority or NHS Commissioner.

Here are a few key recommendations to promote best practice:

• Review NMW legislation and consider the implications on worker pay.
• Assess the activities that could reduce overall pay. Can these be mitigated?
• Develop a strategy for negotiation with the relevant local authority or NHS Commissioner.
• Share goals to increase pay, attract/retain talent and ensure high-quality services. 

For more information, contact Matthew Wort.