The Independent Children's Homes Association (ICHA) survey of around 100 providers found that liabilities surrounding sleep-in pay will potentially drive 10 into insolvency.
The issue stems from an employment appeal tribunal ruling last May that care workers required to sleep in at a service user's home are entitled to be paid the national minimum wage for all hours worked, including the hours spent asleep.
One provider said that they plan to close or sell up as a direct result of the issue.
The findings are revealed in the ICHA's fourth State of the Market survey report, which is based on responses gathered last month.
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