The impact of the new Living Wage and Tyco case update

Two recent developments will be of interest to charities in the health and social care sectors.

The first was announced in George Obsorne’s emergency budget in July this year. The new National Living Wage creates, in effect, a higher minimum wage for workers aged 25 and older of £7.20 from April next year rising to an aspirational £9 an hour by 2020. Whilst it was welcomed by many organisations and across sectors it will have very significant implications for charities in the health and social care sectors.

The Resolution Foundation has predicted that care-providers, being particularly reliant upon low-paid staff, already have to find an additional £1 billion to fund planned increases in the national minimum wage over the next five years. They predict that the additional bill, to fund the national living wage, will be in the region of £1.3 billion.

Shortly after the announcement the five biggest care home providers in the UK wrote to the Chancellor to raise concerns about funding for the increase and warned that there would be a “catastrophic collapse” of the care system with a significant reduction in the number of care holds unless additional funding is found.

The UK Homecare Association has forecast that the national living wage will require councils to pay a minimum price of £16.70 an hour for services. This allows for the national living wage and the costs of running the service (including travel, pension etc.) with 50p left for profit. Their research suggests that the current average rate is just £13.66 per hour.

Some commentators have concluded that the government will need to significantly increase funding for social care to local authorities because without such an increase the system will no longer be able to function.

There is a limit to how much providers can prepare for the change given that they are so dependent upon funding decisions which are outside of their control but it will be important to keep informed about developments and plan, as far as possible, for what could be a significant increase in the costs of providing services.

Tyco – Case update

There have been a lot of press reports about the European Court of Justice case brought by a Spanish trade union against Tyco the multinational fire and security company.

The ECJ decided that, for workers who had no regular place of work, the time spent travelling to their first work assignment and the time spent travelling home from their last work assignment was “working time” for the purpose of the European Working Time Directive (EWTD). This was on the basis that, during these periods, the workers were at their employer’s disposal.

The decision is binding on UK courts and so we recommend that readers review their current arrangements and consider:

  • asking staff to opt out of the Working Time Regulations (the UK version of the EWTD) if they have not already
  • monitoring and/or rearranging shifts to take account of travel from home (if applicable)
  • considering providing a base for workers where possible.

Some of the press reports have suggested that this case might have an impact on the national minimum wage but this is unlikely to be the case because the national minimum wage provisions contain a different definition of “working time” which excludes daily commuting for those paid by reference to time working (hourly paid).

We are aware, however, that there is a case currently going through the Tribunal system against MiHomecare which challenges the exclusion of travel time from calculation of the national minimum wage. We understand that this case goes further than the Tyco case in that it relates to the payment of all travel time between work assignments rather than just the commute from the first and the last work assignment.


We will update readers on the progress of this case in due course but for now the implications of Tyco appear to be relatively limited.

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