National Minimum Wage – Nightmare for the care sector is over: sleep-ins finally put to bed

Employers in the care sector can breathe a huge sigh of relief. The Supreme Court has unanimously held that workers who are required to sleep at or near their workplace, and be on call, are only working when they are awake and carrying out work-related tasks[1]. Therefore, they are not entitled to the National Minimum Wage (NMW) when they are asleep. The Supreme Court’s decision is final and it cannot be appealed, so this issue has finally been put to bed.

Background

Failure to comply with NMW legislation can have significant financial consequences for employers – underpaid workers are entitled to back pay for every underpaid hour (which is uplifted to the current rate of NMW rather than the rate at the time of the underpayment), as well as financial penalties levied by HMRC (subject to a cap of £20,000 per worker). Employers can also be “named and shamed” and the most persistent or serious offenders can be subject to criminal proceedings.

The NMW regulations state that:

(1) Work includes hours when a worker is available, and required to be available, at or near a place of work for the purposes of working unless the worker is at home.

(2) In paragraph (1), hours when a worker is ‘available’ only includes hours when the worker is awake for the purposes of working, even if a worker by arrangement sleeps at or near a place of work and the employer provides suitable facilities for sleeping.

On the face of it, the NMW regulations are clear as to what should happen - a worker carrying out a sleep shift (i.e. a residential overnight shift where they are on call but could sleep if not required) are only entitled to be paid the NMW if they are actually awake and working.

However, the waters were muddied by the 2002 case of British Nursing Association v Inland Revenue where the Court of Appeal held that nurses who worked at night and from home on a 24 hour telephone line, who were permitted to sleep between calls, were actually “working” for NMW purposes throughout the whole of their shift. In other words, they were working, rather than available for work, the whole time. This gave rise to a series of case law which considered whether a worker’s mere presence during a shift, e.g. for security, health and safety or regulatory reasons, meant that they were working for NMW purposes throughout all of their time on shift.

Despite this case law, common practice in the care sector was for a worker carrying out sleep shifts to be paid a fixed fee for the shift plus an hourly rate for any time actually worked. However, there was an acknowledged risk that, if all of the hours on a sleep-in shift counted as work for NMW purposes, then the worker would not have received sufficient pay to comply with the NMW regulations.

In 2018, when the Court of Appeal heard the Mencap case it said that in care worker cases the essence of the arrangement is that the worker is expected to sleep and “it would not be a natural use of language, in a context which distinguishes between (actually) working and being available for work, to describe someone as “working” when they are positively expected to be asleep throughout all or most of the relevant period.”

Therefore, the “presence” argument did not apply. The Supreme Court has now confirmed that this approach is correct.

Facts

The main claimant, Mrs Tomlinson-Blake, was a highly qualified care worker who provided support to two vulnerable adults in their home. She was permitted to sleep when working at night, provided that she slept at her place of work and kept ”a listening ear out” while asleep in case of emergencies, which were infrequent. She was paid an allowance plus one hour’s pay for this time. She brought proceedings to recover wage arrears on the basis that she was entitled to NMW for each hour of her sleep shift.

Both the Employment Tribunal and the Employment Appeal Tribunal had previously found that Mrs Tomlinson-Blake was actually working throughout this shift, even when asleep, and consequently that this time should count for NMW purposes, but the Court of Appeal and now the Supreme Court, did not agree.

Decision

The Supreme Court dismissed the claimants’ appeals, holding that in sleep cases only time spent actually awake and working is relevant for NMW purposes.

The judgment drew on the recommendations of the Low Pay Commission (LPC) when interpreting the NMW regulations. In its 1998 report to Parliament the LPC recommended that: “For hours when workers are paid to sleep on the premises, we recommend that workers and employers should agree their allowance, as they do now. But workers should be entitled to the National Minimum Wage for all times when they are awake and required to be available for work.” The Supreme Court noted that the LPC drew no distinction between workers who are working and those who are available for work and noted that the LPC “did not contemplate that a person in the position of a sleeper-in could be said to be actually working if he was permitted to sleep”.

However, an important note for those operating in the care sector is that the Supreme Court did not find that being asleep at work is always inconsistent with an entitlement to NMW pay. For example, night carers who are expected to be awake for most of their shift, but who are permitted to nap between their duties, are likely to be considered to be working for NMW purposes throughout their shift, and therefore remain entitled to be paid at least the NMW pay for each hour of that shift.

Comment

If a worker falls within the scope of the Mencap decision, then they need only be paid for working hours and there is no issue with back pay, provided those working hours have always been correctly paid. This decision will therefore be welcomed by the care sector, which is already constrained by significant cuts to funding. Previous estimates had calculated that the backpay liabilities could total £400 million.

Mencap released a statement in response to the ruling calling on the government to update legislation relating to sleeps and to embark on social care reform. The statement also confirmed that Mencap would continue paying top-ups for sleeps, as they have done since 2017. Other employers may see the Supreme Court’s judgment as an opportunity to reduce pay for sleeps which they may have previously increased amid the uncertainty, but this would need to be agreed with workers, which seems unlikely and may also attract negative publicity.

Care sector employers should also ensure they have robust systems in place so that hours which are spent actually working are properly recorded and paid to avoid falling foul of the now clarified rules.

While this judgment does clarify the law in this area, some areas of uncertainty remain and may give rise to further litigation. We recommend that employers affected by this ruling obtain legal advice to ensure their pay processes are compliant.

Article co-authored by Kate Bagger.

[1] Royal Mencap Society v Tomlinson-Blake & Others [2021] UKSC 8.