National Minimum Wage: Care Sector

Mike Wood Excerpts

Wednesday 23rd March 2016 Westminster Hall

[Mike Wood (Dudley South) (Con)]

It is a pleasure to serve under your chairmanship, Mr Rosindell, I think for the first time. I thank the hon. Member for Sheffield Central (Paul Blomfield) for securing this debate on an extremely important issue. Before I begin, I declare an interest in that my brother works in the social care sector—he started a new role on Monday—although he is not directly affected by the issues we are discussing this afternoon.

Social care is such an important feature of our society and social workers are integral to the care of people in need and those at risk. Despite that, too many social workers have suffered at the hands of unscrupulous employers—employers who have continued to flout the law and who simply do not pay the full national minimum wage. While HMRC maintains the operational enforcement of the national minimum wage, in my 10 months as a Member of Parliament I have yet to see either a coherent or sensible approach.

I will draw Members’ attention to two cases that I have seen since my election last May and contrast them with each other. The first concerns a care company in the black country. None of its care workers is paid for their travel time or when calls run over. The hourly rate therefore fell well below the national minimum wage over a substantial timeframe, but the HMRC investigation has been ongoing for nearly four years. To date, it has resulted in a notice of underpayment for only one of the employees who filed a complaint, even though the same principle applies to all the care workers.

My constituent, Debra, complained about not being paid the minimum wage in November 2012. It took 30 months before she managed to force HMRC to issue the care company with a notice of underpayment. She was forced to complain to the then Secretary of State for Business, Innovation and Skills and my predecessor, Chris Kelly. HMRC wrote to her in February 2013 to say that it was looking at all the care workers’ records, and wrote again following Debra’s complaint to the Secretary of State in June 2014 that the other care workers were also owed arrears for non-payment of the minimum wage. Nevertheless, HMRC then issued the notice only for her, as if she was the only worker who had not been paid the national minimum wage.

HMRC’s continuous delays have been shocking, and they have been ongoing since Debra’s complaint at the end of 2012. HMRC has also been looking at the cases of two other constituents of mine, Alison and Michelle, since at least March 2015, yet we do not seem to be any further forward than we were at this time last year. HMRC continues with what seem to be unnecessary delays and excuses—according to my case notes they appear to be the very same excuses given to Debra.

None of the care workers at the firm were paid for their travel time between calls or if calls ran over the allotted times. The company’s own paperwork—the rotas and pay slips—clearly show that they did not pay their care workers for what we would understand to be necessary working time. All the care workers were on the same terms and conditions, so the same position applies equally to all the workers.

Despite HMRC writing to Debra that it had “all workers’ records” dating back to February 2014, in a recent telephone call HMRC asked whether my constituents would be prepared to go to an employment tribunal and be cross-examined. That does not seem appropriate given the objectively verified facts. HMRC has not even calculated the arrears that the women appear to be owed. The same tactic had been used previously with Debra. HMRC does not have to mention any employment tribunal; its job is to get the evidence, calculate the arrears and issue a notice of underpayment. Only after the notice is issued can the employer force a tribunal, and an employer has only 28 days to do so following the issuing of such a notice by HMRC. Indeed, until a notice is issued the care company has absolutely nothing to appeal against.

There is clearly something very wrong indeed with how HMRC enforces compliance with the national minimum wage in the care sector. As I said, it has been investigating this care company for nearly four years, yet despite finding that not only Debra but the other care workers are owed minimum wage arrears, it has still issued only the one notice.

That case should be contrasted with HMRC’s response to another case, although it goes slightly beyond the narrow confines of the debate. At a manufacturer in my constituency, a genuine clerical error led to the underpayment of four pieceworkers out of a workforce of 240. Over three years, the underpayment totalled just under £600, or 0.005% of the total wage bill. It was clearly a genuine oversight that had not been identified in five external audits.

Despite the fact that that manufacturing company co-operated fully with HMRC—indeed, as soon as it was made aware of the underpayments, it repaid them, along with the penalty, on the next available working day—its response seems to have been very different from what happened with the care company. The manufacturer has been named and shamed and now has to deal with the resulting implications while trying to negotiate a contract with high-street retailers.

HMRC’s response has been very inconsistent. In my experience, it is focusing its energy on what might be seen as the easy cases—companies that are genuinely trying to do the right thing but may have made a mistake —while it does very little effectively to enforce the national minimum wage for companies such as the care company I highlighted, which have consistently obstructed and obfuscated and shown total disregard for HMRC and for their legal requirement to pay the national minimum wage. That has to change.

I urge my hon. Friend the Minister to ask HMRC urgently to review its general approach to the enforcement of the national minimum wage. I will also write privately with the details of the two cases to which I referred to ask him to speak to HMRC about what is going on and how we can have a more consistent and equitable approach to ensure that all employers pay the national minimum wage.