The issue has arisen because HMRC guidance now states that care workers should be paid the NMW when working on ‘sleep in’ shifts, calculated according to the number of hours with the client, rather than a flat rate for the night of around £25 - £30, as has previously been the norm.

In July, HMRC agreed to waive all historic penalties in the sector where employers incorrectly paid workers a flat-rate for sleep-in shifts instead of hourly rates. This was in response to concerns over the combined impact which financial penalties and arrears of wages could have on the stability and long-term viability of providers.

The government says the further one month delay in requiring charities to make arrangements for back payments will allow government ‘to establish how providers’ back pay bills will affect vulnerable people’s care’.

The evidence base will also ensure any intervention is proportionate and necessary and could be required to satisfy EU State aid rules on government funding for private organisations.

During this temporary pause, the government says it will develop a new enforcement scheme for the sector to encourage and support social care providers to identify back pay owed to their staff. This will help to minimise the impact of future minimum wage enforcement in the sector while seeking to ensure workers receive the arrears they are owed.

The exceptional measures announced in July, which include penalty waivers, will remain in place until guidelines on this new approach are outlined next month.

Derek Lewis, chair of learning disability charity Mencap, which has led the sector’s appeals to government over the issues, said:  ‘It is deeply disappointing that, after many months of review and consideration, the government is still not able to announce any decision on the provision of support for care providers faced with a £400m back pay liability as a result of changes in government guidance on payments for sleep-ins.

‘The further delay will mean that people with a learning disability, their families and carers are subjected to yet more uncertainty and anxiety, while providers will be forced to delay essential investment, and local authorities will struggle to persuade providers to take on new contracts.

‘It is nevertheless encouraging that the government appears to accept the need to support the sector in dealing with the £400m back pay liability. It remains essential that the sector receives full funding for this liability to avoid unacceptable harm to people with a learning disability and insolvencies among providers.’

Department for Business, Energy and Industrial Strategy guidance: Enforcement of the National Minimum Wage in the social care sector: ‘sleep-in’ shifts is here.

Report by Pat Sweet