Mon, 15 August 2022

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Charities given breathing space over £400m back payments for staff

Charities given breathing space over £400m back payments for staff

John Ashmore

2 min read

The Government has announced it is pausing attempts to recover around £400m in back pay from charities amid fears some organisations could go bust.

Several disabilities charities, including Mencap, faced a huge bill after the Government changed the rules on overnight staff being paid the minimum wage.

HMRC had been about to start enforcement action to force around 200 charities to pay out six years' worth of extra pay, which could have led some to close down.

But the Department for Business, Energy and Industrial Strategy has now said no action will be taken until 2 October, and there will be no fines for charities who did not pay the minimum wage for overnight shifts in the past, when government guidance said it was not necessary.

However Mencap, one of the organisations most severely affected by the HMRC action, said the delay in enforcement had not addressed their fundamental concerns.

“The Government say they will consider this further but they have heard for months about the mayhem this will cause," said chairman Derek Lewis.

"The announcement does not address the core request made by the sector at all."

But a statement from the Business department said that ministers were still committed to care workers receiving back pay for shifts where they had not received the minimum wage.

“Social care providers play a vital role in supporting some of the most vulnerable people in our society and workers in that sector should be paid fairly for the important work they do. The government remains equally committed to making sure workers in this sector receive the minimum wage they are legally entitled to, including historic arrears.

At the same time, the department hinted at action to soften the blow for any organisations left facing a hefty back pay bill.

“The Government will continue to look at this issue extremely carefully alongside industry representatives to see whether any further support is needed and ensure that action taken to protect workers is fair and proportionate, while seeing how it might be possible to minimise any impact on social care provision.” 

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