National Minimum Wage

At Cheshire East Council’s Audit & Governance Committee meeting on 28
September 2017, Cllr Sam Corcoran challenged the Council’s external
auditors over their statement that no ‘non-compliances with relevant laws and
regulations’ had been identified during their audit work. Leaving aside the four
separate matters being investigated by the police (awarding of contracts to
CoreFit Ltd, Air Quality data manipulation, awarding of £70,000 to Berkeley
Primary Academy in Willaston and land acquisitions), Cllr Corcoran pointed
out that failing to comply with National Minimum Wage (‘NMW’) legislation is a
criminal offence.
Cheshire East Council has been embroiled in allegations that it failed to
comply with NMW legislation over payments to care workers who have to
sleep in the same premises as the people they are caring for. The Council has
repeatedly denied being in breach of NMW legislation. However, on 27
September, the Council issued a press release saying that it was going to
increase the amounts paid to staff and backdate the increase by 2 years.
It may now be possible to explain why the Council has chosen this moment to
change its mind and admit to having underpaid its workers. The Council claim
it is due to “a landmark legal ruling”, but the critical ruling was in November
2013. However, it may be more relevant that an HMRC amnesty to avoid
penalties and any criminal prosecution expires on 2 October!
The Conservative cabinet member for corporate policy and legal services
said: “We have undertaken an extensive review to establish exactly who this
ruling affects and how much each individual is owed.”
At the Audit Committee meeting Cllr Sam Corcoran quoted from an email in
March 2014 from a finance officer saying “I am looking into the financial
impact of the recent ruling over Whittlestone v BJP Home Support Ltd (Nov
2013) where it was decided that NMW is applicable for employees sleeping
shifts.” This makes clear that the Council has known about breaches of NMW
legislation for over 3 years.

Another email in June 2016 from a legal officer says “There is no limit on the
length of arrears that can be claimed, provided it is all part of the same series
of unlawful deductions.” In the light of this clear advice back in 2014 another
Labour Councillor on the committee, Nick Mannion, then asked Cheshire East
officers why the extra pay was only being backdated for 2 years.
Officers then announced that the increase could be backdated by 6 years and
that the backpay will affect about 160 people and will cost the Council about
£200,000 for the first 2 years and about an additional £100,000 for 6 years.
Cllr Laura Jeuda, Labour Councillor for Macclesfield South said;
‘It is a great pity that CEC chose to ignore the advice of officers who warned
at the time that the council were in breach of NMW legislation. Instead they
resorted to what is now known to be the usual default position of denial and
blaming the very people who alerted them to the problem. 
This whole sorry business has cost employees their jobs, denied low paid
workers their employment rights and will ultimately cost the taxpayers of
Cheshire East yet another unnecessary expense.’

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