Background

The National Minimum Wage Regulations provide for the calculation of hourly pay in a pay reference period, dividing work into four separate categories. It was the categories of “time work” and “salaried hours work” which were the subject of the claims before the Court of Appeal.

This decision concerns two conjoined cases, Royal Mencap Society v Tomlinson-Blake and Shannon v Rampersad. The Employment Appeal Tribunal had arrived at different conclusions in these cases, which involved similar circumstances.

Mencap v Tomlinson-Blake

Ms Tomlinson-Blake was a care support worker who provided care to two vulnerable adults in their homes, via day shifts and sleep-in shifts. When on a sleep-in, she was not allocated any specific tasks but was required to remain on the premises and intervene if necessary. The need to intervene was “real but infrequent” and as a matter of fact, Ms Tomlinson-Blake had only been required to intervene on six occasions over a 16-month period.

Ms Tomlinson-Blake claimed that the whole of her sleep-in shift, including the time she spent asleep, should be counted as “time work” for the purpose of the NMW Regulations.
Her claim was upheld by the Employment Appeal Tribunal (EAT) and Mencap appealed to the Court of Appeal.

Shannon v Rampersad

Mr Shannon had an arrangement with the owner of a residential care home that he could live in free accommodation on the premises and receive a small weekly payment, on condition that he act as an “on call night assistant” at the care home. Mr Shannon was required to remain on the premises and provide assistance, if required, to the night care worker on duty. In practice, he was very rarely required to provide any assistance.
Mr Shannon argued that the time he spent on call amounted to “salaried hours work” under the NMW Regulations. The EAT dismissed his claim and he appealed to the Court of Appeal.

Court of Appeal decision

The Court of Appeal has dismissed the claims of both Ms Tomlinson-Blake and Mr Shannon. The Court ruled that there was a distinction to be made between their working arrangements - being available for work - and actively working. Workers on sleep-in shifts can only have hours counted for NMW purposes where they are, and are required to be, awake for the purpose of performing some specific activity. Accordingly, the Court determined that the employers in each case were not required to pay the NMW for the entirety of the sleep-in shift.

What to take away

This decision will be welcomed by employers across the social care sector, which had been faced with the prospect of paying huge sums in backpay to bring sleep-in payments up to NMW levels, together with a significantly increased wage bill going forward.

Many care providers may have already altered their practices due to the risk of claims for back pay and/or penalties, and are now paying staff the NMW for the entirety of a sleep-in shift. Employers in this position may wish to consider whether they should continue to do so, or whether they might attempt to change their employees’ terms and conditions, with the attendant risk of claims and industrial unrest.

Employers considering making changes should be mindful that whilst this decision provides some welcome clarity on the law relating to sleep-ins and the NMW, it is thought likely that it will be appealed to the Supreme Court. The situation might, therefore, be subject to further rulings. Given the current situation, we advise employers in the care sector to adopt a “wait and see” approach until we have some further clarity.

The Court of Appeal’s decision will impact on the future operation of the voluntary Social Care Compliance Scheme (SCCS), introduced by the Government in late 2017. The SCCS provided a mechanism to social care providers to self-identify and make back payments of what they owed in unpaid NMW, as an alternative to the HMRC’s normal enforcement regime. The Court of Appeal’s decision has caused uncertainty as to whether those social care providers who made payments under the SCCS or faced penalties under the enforcement regime will be entitled to repayment of any sums paid out. Current HMRC guidance and practices which were developed following earlier court decisions will no doubt be revised in due course.

In an interesting development, one of the employer parties, Mencap, has already issued a press release calling on better pay for workers in the care sector and for changes in the law to ensure that sleep-in shifts are paid at a higher rate. Therefore, whilst we do now have some clarity on the current legal position, it appears that this will continue to be an issue which attracts challenge and where some further developments are likely.

If you are concerned about the impact of this decision on your staffing arrangements, we would be happy to advise you on an individual basis on the most suitable approach for your organisation.

For further information on how this issue might affect your organisation, please contact Rachel Luddem or Bridget Prosser.