Care and life sciences sector – regulatory update

Organisations operating in the care and life sciences sector will be familiar with regulatory engagement and investigation. Key regulators include the Care Inspectorate, Medicines and Healthcare products Regulatory Agency, the Health & Safety Executive and police agencies.

Recently, a different regulator, HMRC, has been active in investigating staff conditions including pay and working conditions.

HMRC reviews

The process is:

1. HMRC will issue a letter explaining that they are carrying out a review of pay and working conditions bearing in mind National Minimum Wage and National Living Wage requirements.
2. A date will be set for a meeting with HMRC officials attending the organisation’s premises to speak with the senior management team. HMRC will also speak with a sample of staff during the attendance.
3. The letter will explain that HMRC will review business records, including payslips, contracts of employment, and internal rotas / time management system records.
4. HMRC also review open source records such as those on Companies House. It’s therefore important that organisations ensure that public filings are up-to-date and accurate.

A sector organisation is entitled to have legal representation in attendance during the HMRC meeting. We have advised several sector organisations throughout the process including at the meeting. In the event legal representation is engaged, the first step is engagement with HMRC including to explain:

1. The organisation will cooperate with HMRC (in a controlled manner).
2. Records can be provided after the meeting once HMRC specifies the date period for records and the number of staff for whom records are required. It is not necessary to provide records in advance of the meeting and HMRC should adopt a proportionate approach to the number of staff for whom records are required. A date can be agreed for the provision of records.
3. HMRC should produce a draft minute of the meeting for comment by the organisation and its legal team. The draft minute should include summaries of discussions with the organisation’s staff given that senior management teams and the organisation’s legal team are not entitled to sit in during those discussions.
4. Where staff are unavailable, for instance because they are carers operating away from the organisation’s offices, HMRC should be asked to provide written questionnaires for the staff members to complete and sign. It is vital that an organisation’s senior management team does not seek to influence the responses to the questionnaires.

During the meeting, HMRC will likely ask questions in relation to:

1. Staff numbers and nature of employment.
2. Details of pay arrangements including frequency, amount, the provision of payslips and any deductions.
3. Recruitment processes.
4. Right to work checks.
5. Overtime arrangements.
6. Holiday entitlement.
7. Absence arrangements.
8. Training provision.
9. Travel for work arrangements.
10. Equipment and uniforms.

Following the discussion, HMRC will seek to obtain information from a sample of staff either direct or via questionnaires. Debriefs can take place with the relevant staff members.

Following the meeting, it is important to gather the records required and to review them before providing them to HMRC. Once received, HMRC will review the records and either follow up or close the review. In the event that non-compliance is identified, HMRC can either impose financial penalties or report matters for criminal investigation and prosecution.

 Key messages

1. The care and life sciences sector continues to be highly regulated.
2. HMRC is active in investigating treatment of staff in the sector.
3. Legal support is available to manage the HMRC review process. We are happy to assist.