Date of decision: 23 Jun 2025
Summary
Mr X complained about the Council’s refusal to make statutory redundancy payments to two personal assistants after the death of the care recipient, his late wife Mrs Y. The complaint focused on the impact of unpaid redundancy on the workers and their employer, citing stress and financial strain. Ultimately no fault was found on the part of the Council.
What happened
From 2006, the care recipient (Mrs Y) employed two personal assistants using direct payments administered by the Council. The Council advised on employer responsibilities, including annual employer’s liability insurance, which the recipient maintained for over a decade.
In 2021, without informing the Council, Mrs Y switched to a home insurance policy that did not provide the same cover – it may have provided legal expenses insurance and [we expect] public liability to people visiting her home. [The obligation to have employer’s liability cover does not extend to self employed PAs, but the report does not go in to the detail of why Mrs Y switched cover. Some people think that the Employer’s Liability legislation does not extend to domestic servants, but in fact, that is the health and safety at work legislation.]
Mrs Y died in 2024; the Council subsequently closed the direct payment account, prompting Mr X (Mrs Y’s husband) to request that the Council pay redundancy owed to the assistants.
The Council responded, explaining that it had no knowledge that Mrs Y had stopped her employer’s liability insurance, further adding that as Mrs Y was receiving her direct payments through a bank transfer rather than through a prepaid card, as ‘advised’, it reasonably relied on her submitting her returns forms to track her usage of the money. Since she did not submit the forms when requested the Council could not see that she had stopped paying her employer’s liability insurance.
Therefore, the Council declined Mr X’s request that it pay redundancy payments to the assistants. Instead, as a goodwill gesture, it said it would not recover a recent account overpayment, suggesting this be used for redundancy costs. [There is no detail as to what the size or nature of the overpayment was, or whether it covered the redundancy liability.]
What was found
The Ombudsman found the Council had informed the recipient of employer responsibilities and was not notified when insurance arrangements changed. The legal responsibility for redundancy pay lay with the recipient as employer, not the Council.
The Council was not at fault for not detecting the lapsed insurance and bore no statutory liability for redundancy owed after the employer’s death. The Ombudsman saw no grounds for further compensation or fault, as the Council followed the law and provided adequate information.
Points to note for councils, professionals, people using services and their carers, advocacy groups and members of the public
The Care Act 2014 and its statutory guidance require councils to ensure anyone receiving a direct payment is provided with clear, comprehensive, and timely information to make informed choices. This includes explicit advice on the responsibilities that come with being an employer—such as redundancy liabilities and maintaining essential insurance cover. Councils must ensure their advice keeps pace with legal developments and good practice, making the risks of failing to meet employer duties clear at every review, in writing and during ongoing case management.
Community care law makes it clear that a council cannot discharge its own duties under the Care Act simply by providing initial information about employment liabilities if, in practice, there are failures in monitoring, review, or responding to significant changes in circumstance. Over-reliance on self-disclosure or retrospective checks after the care recipient’s death risks leaving workers unprotected and may expose councils to challenges under administrative law standards related to sufficiency of the budget in the first place.
The investigator goes back to 2015 and says as follows:
From 2015 onwards, the care and support statutory guidance states specific information should also be given to people about the requirements to have plans in place for redundancy payments due to circumstances such as moving home, a change in care and support needs, or the result of the death of the direct payment holder, or care recipient. If the person meets needs by directly employing someone, they will be responsible for all costs of employment including redundancy payments and this should be made clear to people as part of the information and advice process before a decision is made whether to request direct payments. The local authority must ensure that the direct payment is sufficient to meet these costs if it is appropriate for the adult to meet their needs by employing someone.
The report goes on:
It [the Guidance] states normally, if someone dies any employment liabilities will be met by the person’s estate, but with direct payments local authorities and adults have freedom to develop their own arrangements for dealing with this issue. This could include using any unspent direct payment to contribute to any redundancy costs, having insurance in place that covers redundancy, or the local authority agreeing to cover redundancy payments through the direct payment amount.
What the investigator does not add, is this paragraph from the Guidance:
Local authorities may need to consider any redundancy costs payable to personal assistants and be prepared to provide advice on how these might be met. As with other costs the personal budget must be a sufficient amount to meet the person’s needs, including the provision of any redundancy costs, if appropriate to meet needs, and subject to other arrangements that may have been made.
This part of the Guidance was written in an era in which councils had been used to running direct payments WITH ACTUAL CONTINGENCY fund portions, for all sorts of statutory liabilities, so that one could build up that fund as one went along – even though it might never be needed for redundancy (say if the person left of their own accord…) or never got pregnant (maternity).
So, when THAT stopped, due to austerity creating financial constraints, it became normal practice for councils just to say ‘come back to us if you need to’…
It is just about feasible to construct an argument for saying that IF insurance has been funded by the council that ACTUALLY covered the payment of a person’s redundancy entitlement in any event that might arise, then there is no need to fund a contingent redundancy payment. This insurance is legally required to protect employers against claims from employees who suffer injury or illness at work. It covers compensation and legal fees related to such cases, not contractual or statutory employment benefits like redundancy pay.
There are specialist products (for instance, ‘Care Protect’ (from Fish Insurance)) which offers up to £2000 per employee AND only if you have sought and taken advice – for which of course you need to be aware of legal risk in the first place.
If a council’s arrangements or lack of active review lead to a situation where personal assistants are deprived of statutory protections after long service, there is a real risk of being found in breach of the Care Act duties.
Employment law may well mean that the individual employer is liable to the assistant for redundancy entitlement, but they will look to the council for a sufficient budget to meet the legal responsibility.
We think that whilst technically correct, in law as to where the liability lies, the report might make direct payments even less attractive for take-up purposes, than they are fast becoming. We are also perturbed by the omission from the report of any details as to the nature of the cover which the investigator has allowed him or herself to be assured was contained in the original insurance and which would have supposedly covered the actual redundancy responsibility triggered by Mrs Y’s death.
The statutory guidance calls for regular reviews and effective monitoring mechanisms for all direct payments, with an emphasis on person-centered risk management and clear record-keeping – financial review of direct payments management being an extra responsibility on top of review of the working of the care plan itself.
We are also a little concerned that the investigator takes it as a given that the actual employer was indeed the wife, and not the husband, potentially, as an Authorised Person, whose role as a principal would mean that the individual would be looking to a live person, not the deceased person’s estate, for compensation. In this case, the executor likely being the spouse, it might make no practical difference (and Fish Insurance’s Care Protect DOES cover the estate as well).
The Ombudsman’s explanation for this is that the Council’s correspondence was with Mrs Y, throughout, and we expect her husband was administering her estate, but it is very common to find that correspondence about charges and direct payments is sent directly to people who are known to lack capacity – as it is considered more person-centred, however ineffectual it is.
Please use the following link if you want to read the original Local Government and Social Care Ombudsman’s Central Bedfordshire Council (24 017 351) report.
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