Treatment of "sleep-in" shifts for national minimum wage (NMW) purposes is an area that can often cause confusion. Where a worker is required to work a number of sleep-in night shifts at the employer's premises, and be available in case of an emergency, does the full night shift constitute 'working' for the purposes of the NMW? Alternatively, is the worker only 'working' for NMW payment purposes when they are awake to carry out any relevant duties? The point is particularly significant in the care sector where sleep-in duties commonly arise.
The Court of Appeal has now bucked the trend coming from some 15 EAT judgments, to rule that "the only time that counts for NMW purposes [during sleep-in shifts] is the time when the worker is required to be awake for the purpose of working" (combined judgment in Royal Mencap Society v Tomlinson-Blake and Shannon v Rampersad t/a Clifton House Residential Home).
Why the confusion?
Under the NMW legislation, salaried hours workers and time work workers are regarded as working when they are available at or near a place of work, other than their home, for the purpose of doing work and are required to be available for such work except, where a worker by arrangement sleeps at or near a place of work, and is provided with suitable facilities for sleeping, then only time when the worker is awake for the purpose of working is treated as time work or salaried hours work - regulations 27 and 32 National Minimum Wage Regulations 2015.
Over recent years, many tribunal and Employment Appeal Tribunal (EAT) judgments have increasingly found that in certain circumstances a worker, even though provided with sleeping accommodation, was nevertheless "working" when sleeping merely by being present at the employer's premises.
Back in April 2017, the question of sleep-in shifts and the NMW was considered by the President of the EAT in three combined appeals of Focus Care Agency Ltd v Roberts, Frudd v The Partington Group Ltd and Royal Mencap Society v Tomlinson-Blake. He concluded:
"A multifactorial evaluation is required. No single factor is determinative and the relevance and weight of particular factors will vary with and depend on the context and circumstances of the particular case."
While the answer was the dreaded, "it depends on the facts of the case", the President of the EAT's guidance essentially agreed with the increasing trend for tribunals to find workers will be 'working' the entire sleep-in shift even when sleeping where:
- the employer is under a statutory or contractual duty to have a worker on the premises at all times;
- the worker is unable to leave the premises at any time during the shift; and/or
- the worker has a degree of responsibility for personally performing duties when needed and making judgments about what is required over and above merely having to call out emergency services.
The EAT guidance had significant implications for many care providers operating on very tight margins. Not only did many employers need to adjust their pay arrangements going forward, they faced significant back-pay claims as well as potential HMRC enforcement notices and financial penalties of up to £20,000 per employee. Indeed, HMRC in November 2017 introduced the Social Care Compliance Scheme (SCCS) to facilitate a solution to the issue of historic NMW underpayments for sleep-in shifts
What does the Court of Appeal judgment mean for employers?
In a single judgment, the Court of Appeal has effectively overturned the precedent value of numerous EAT judgments concerning sleep-in shifts. Quite simply the only time that counts for NMW purposes is the time when the worker is required to be awake and actually carrying out work. Time spent sleeping/relaxing does not count. In reaching its conclusion the Court of Appeal relied heavily on the First Report of the Low Pay Commission (LPC) published in June 1998 which states:
"For hours when workers are paid to sleep on the work premises, 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."
There is a difference between those employed to work night shifts where they are expected to be awake and working and those employed to cover a sleep-in shift where they are expected to be sleeping but available to deal with the occasional emergency. The Court of Appeal also referenced the Fourth Report of the LPC which noted a "difference between these sleepovers and on-call or standby arrangements where a worker is required to be at the workplace outside of normal working hours with the expectation that he or she will be required to work".
As regards the two cases before the Court of Appeal:
Royal Mencap Society v Tomlinson-Blake
This concerned a highly qualified care support worker who provided care for two vulnerable adults. She worked a pattern of two day shifts for which she would be paid a salary with an intervening sleep-in shift for which she receive a flat rate. She would be paid an additional hourly rate for any time she was woken to perform duties. During the sleep-in shifts she had no specific tasks to carry out and was expected to sleep in an allocated private bedroom, but had to remain on the premises in case her help was needed. In the previous 16 months she was only called upon in the night on six occasions.
The tribunal and EAT, held that the care worker was 'working' for NMW purposes for the entirety of the sleep-in shift as the employer was under a legal obligation to have someone at the premises under statute and under its contract with the local authority, she was required to remain at the premises throughout the shift and use her professional judgment to determine when intervention was needed in the night and to respond appropriately and promptly.
The Court of Appeal has now held that the tribunal and EAT were wrong. The care worker slept by arrangement at her place of work and was provided with suitable facilities for doing so. It follows that she is to be treated as being available for work during those hours and not actually working. As such the sleep-in exception applies. The result is that only those hours during which she was required to be awake for the purpose of working count for NMW purposes.
Shannon v Rampersad t/a Clifton House Residential Home
This concerned an on-call night care assistant who lived in the top floor flat of a 16 person residential care home. Mr Shannon was the son of a friend of the home's owner and worked as a driver for a separate employer. He was given a rent and utilities free flat in the residential home together with a £90 weekly payment. In exchange, he was required to be in his flat from 10 pm to 7 am (unless otherwise agreed) and required to respond in case the qualified night care worker on duty requested assistance (rare in reality).
In the circumstances of this case, the tribunal, EAT and Court of Appeal all agreed that Mr Shannon could only be considered to be working if and when he was called on to assist the night care worker.
Where does this leave us?
Unless and until there is a change in the legislation, the NMW does not apply to 'sleep-in' shifts unless the worker is required to be awake for the purpose of working. Care providers working on small margins concerned about their back pay liabilities will be relieved, while often low paid sleep-in workers will be disappointed.
It is important to note that this judgment deals with shifts where the worker is expected to sleep all or most of the shift but may be woken if required to undertake some specific activity. A footnote to the judgment indicates that a night watchman with periodic patrolling duties throughout the night would be working throughout the shift even if permitted to sleep for short periods between patrols.
It remains to be seen whether, and if so how, HMRC will alter its enforcement policies and what will happen in respect of any penalties for underpayments based on what was previously understood to be the correct (though now longer correct) legal position.
Will we see reform of the NMW Regulations? Interestingly, following their court victory, Mencap's press release calls for better Government funding of the care sector and legislation to ensure care workers are being paid a "higher rate" which many care providers have put into place over the past year.
A further appeal to the Supreme Court is highly likely.