The challenge faced by care providers regarding the interpretation of National Minimum Wage (NMW) payments for sleep ins is not a new one. However, multiple cases have been reviewed by the Employment Appeal Tribunal (EAT) and the Court of Appeal since the 2015 NMW Regulations update came into force and the guidance remains conflicted.
The challenge for those care providers who offer sleep in services is whether NMW is payable to sleep in workers for the hours that they are not awake and working.
Traditionally, workers have been paid a flat sum for each sleep in shift, plus an hourly rate for any time they are awake and working. This appeared to be allowed by NMW regulations (27 and 32) which state that “When a worker is available at, or near, their place of work for the purpose of doing work and is required to be available for such work, that time will count as time spent working unless:
- The worker’s home is at or near their place of work and during that time they are allowed to spend it at home; or
- The worker sleeps at or near a place of work, is provided with suitable facilities for sleeping and they are asleep or not working.”
In contrast, guidance issued by the Department for Business, Energy and Industrial Strategy (’BEIS’) in October states: “A worker who is found to be working, even though they are asleep, is entitled to the NMW for the entire time they are at work.” The guidance indicates that where a worker is legally required to be present for health and safety reasons and unable to leave the premises at any time.
This reflects a 2014 EAT ruling (Esparon v Slavikovska) which decided that where a care worker is doing time or salaried work, even when asleep and waiting to work, they are in fact working. This decision, had been reached primarily on the basis that there was a requirement on the worker to be at their place of work and they could not come and go as they please. This was supported with two further cases: Whittlestone v BJP Home Support Limited EAT (2013) and Tomlinson-Blake v Royal Mencap Society ET August (2016).
In February, the UK government Department of Health minister, David Mowat, told MPs that the sector faced “quite a serious issue” for which no cost provision had been made. “There was a court case around sleepovers in which the law was clarified in a way that the government didn’t expect it to be clarified,” he said. “Now, potentially, charities – and indeed individuals who have got personal budgets – could be held liable for minimum-wage violations going back six years. And the cost is enormous.”
David Mowat went on to indicate that the issue could lead to a “£200m-ish headache for the social care sector.”
Other tribunal rulings could be held to contradict this. In the case of Shannon v Rampersad & Rampersad T/A Clifton House Residential Home (2015), it was ruled that time spent asleep and not working was not considered as time spent working, where there was another care worker undertaking a night shift, and Shannon was only called upon to support, if required However, this seems to be a unique position given the cases referred to above.
Prior to the summer of 2016, HMRC’s position on sleep ins was clear. They took a consistent view that the time spent awake and working during a sleep in, only counted towards NMW. Since then, that approach appears to have changed, with HMRC taking the view during some of their most recent inspections, that every hour of a sleep in counts for NMW where:
- there was a requirement for the workers to be present during the night, and
- those workers were not allowed to leave the service during the hours they are required to sleep-in.
HMRC’s approach is in line with the BEIS guidance and has the potential to create a significant issue for providers. They may be required to go through their payroll records for up to a maximum of six years to calculate past liability; a complex undertaking in a sector with staff turnover rates of more than 20%.
In January 2017, HMRC was actively investigating 130 social care employers for NMW breaches.
While current BEIS guidance and HMRC’s position relate to either “time work” (work that is paid for with reference to an hourly rate) or “salaried hours work” (work that is paid for with reference to a monthly payment), there is the potential that a sleep in may be considered “unmeasured work” (which is any other work that is not time work or salaried work). Unmeasured work, under Regulations 44–50 of the NMW Regulations would, for example, be applicable where the employee is not entitled under their contract to be paid for the sleep in shift by reference to the time worked, nor do the workers receive a salary for the sleep in shift.
At this time, the most common solution to ensure that NMW is achieved is through introducing top up payments - i.e.
- paying hourly rates for normal shifts that do not involve a sleep in; and
- a flat rate for sleep in shifts; and
- then doing a calculation for every pay reference period, dividing total pay by total hours (including all hours of a sleep in shift) and then paying for any short fall below NMW in the next pay reference period as a top up payment.
While it is considered unlikely that the intentions of parliament were to target sleep ins when Regulations 27 and 32 were introduced, the uncertainty created is yet to be addressed. However, the BEIS and HMRC position indicates that this will continue to be an area of focus.
If you are unsure about how this affects your care business, please contact a member of the Health and Care team.