Staff working overtime ‘underpaid’

Staff working ‘large amounts of overtime’ were ‘underpaid’ because bosses at a council-owned company were not doing their job properly, a local authority review has found.

A report published ahead of an Oldham Council audit committee meeting on July 22 has revealed the outcome of a review into the local authority-owned company Oldham Total Care. The company was bought by the council in 2023 when it went into administration.

This is because the closure of the care home on Middlewood Court in Chadderton would have meant around 100 residents, many with complex needs and requiring specialist nursing care, would have been forced to be relocated including potentially outside the borough away from their families. 200 jobs were also at risk.

Oldham Council’s audit team, which are tasked with scrutinising the local authority from within, have raised a number of concerns about the operation of the company. One of them was that financial accounts for one year were filed five months late.

This resulted in a fine to the company and auditors have made a recommendation to the local authority as a result.

Concerns were also raised about the company’s negative net worth of £1.6m as well as the lack of an agreement between the local authority and the firm. This agreement would set out what services should be provided and to what standard.

Auditors also raised issues over holiday pay not taking into account those members of staff who are working overtime, adding: “This is causing staff to be underpaid, especially those who have a small number of contractual hours and have worked large amounts of overtime.”

Statutory sick pay is also being worked out manually, some adjustments and levies were not included in payments sent to His Majesty’s Revenue and Customers (HMRC), and the payroll officer did not have access to HMRC’s online PAYE portal.

The company faced a £20,000 charge because PAYE, made up of Income Tax and National Insurance,  was not being paid correctly and on time. HMRC also thought staff had two jobs each because of the tax codes being allocated.

Auditors also criticised ‘ineffective debt management, reduced cashflow and an increase in the amount of debt written off’ with outstanding debt in December 2024 being £624,000. Issues were also found with five purchase orders.

Overall, auditors said their assessment of the systems and controls in place were ‘weak’ issuing 12 recommendations to be acted upon. Council management in response said they had addressed some issues already and were working to address others.

They said: “The organisation was expected to make a loss in the first two years of ownership by the council. This was provided for when the company was acquired.

“The focus has been on service improvement, with a key driver being training of staff, quality of care and service improvement.”

A project team has been set up to improve future financial sustainability and ‘efforts will be made to ensure that no further fees are charged’ by HMRC. Management also said core payments of income tax and NI to HMRC were ‘always made on time and in full’.

The review comes at a time when the company is missing a key person from its board. Due to a stalemate between the borough’s different political parties rowing over who should be in control, the council currently has no leader and cabinet.

Usually the cabinet member for adults, health, and wellbeing services would sit on the board but this position is still unfilled. Officers are expected to declare the council is acting unlawfully in the coming weeks.

Another audit report to be presented to councillors also highlighted issues in recovering council tax debt which has risen from nearly £33m in 2020 to £49m in 2025. The local authority is currently pursuing debts in a number of cases through legal means.

A council spokesperson said: “When the council made the decision to step in and save Chadderton Total Care, now Oldham Total Care, we knew the business would come with issues. We have been working through them, with this audit identifying a number of areas where financial processes and governance arrangements could be strengthened.

“Actions already completed or underway include introducing monthly board meetings, strengthening purchase order approval controls, reviewing governance arrangements and board membership, improving risk management processes, and developing plans to address the organisation’s long-term financial sustainability.

“Work is also continuing to improve payroll processes, debt management and financial systems, with progress against the recommendations being closely monitored.

“We remain committed to ensuring strong governance, effective financial management and high-quality care for residents.”