Sleep-Ins And The National Minimum Wage
Sleep-ins have been a topic of controversy for some time, but the issue has become more pressing recently with escalating costs in the sector and, coupled with a new approach by HMRC to enforce payment of the National Minimum Wage (NMW) for sleep-ins, the issue is causing a potential crisis for care providers.
Recently an independent survey was carried out by the Voluntary Disability Organisations Disability Group (VODG), Agenda Consulting and Trowers & Hamlins LLP which provides a comprehensive overview of the likely effect on the sector of the application of the NMW to sleep-ins.
The basic legal position
A worker who is required to be on the premises and who would be disciplined if they left the workplace will be deemed to be working for the whole of their overnight shift even if they are sleeping during some, or all, of this time. This means that they are entitled to be paid the NMW (which can be the National Living Wage) for every hour that they are working.
The risks
The risks of not paying the NMW for sleep-ins are that both workers and HMRC may have claims for back pay against those care providers that do not pay. Many care providers are now having to dig deep to try and finance payment of substantial arrears as a result of HMRC’s change in tack.
HMRC audits and inconsistencies
In the survey 84% of those audited specifically in relation to sleep-ins had audits which took place in 2016 or 2017. 35% received a notice of underpayment. A quarter of the 35% were only asked to make a single year of back payments, but another quarter were asked to cover 5.3 years on average.
Implications for existing contracts
Who will pay for the additional costs? Commissioners have only agreed to fund 14% of services at NMW rates according to the survey results.
The survey asked those providers who do not pay the NMW for sleep-ins what the impact will be if they have to pay the NMW for these periods without extra funding. The results show that 25% of services would have to be handed back to commissioners.
There is the impact on the care providers themselves too. For those not paying NMW rates 61% would need to make redundancies if they met the additional expense of paying the NMW.
Recent developments
The Employment Appeal Tribunal (EAT) recently considered three conjoined appeals concerning how time spent asleep during a ‘sleep-in’ shift should be treated in Focus Care Agency Ltd v Roberts, Frudd and another v The Partington Group Ltd, and Royal Mencap Society v Tomlinson-Blake. The central issue was whether employees who sleep-in in order to carry out duties if required, engage in “time work” for the full duration of the sleep-in shift or whether they are working for NMW payment purposes only when they are awake to carry out any relevant duties.
The EAT confirmed that a “multi-factorial evaluation” should be applied to establish whether or not the individual is working. The factors will include a consideration of the work being carried out, whether there is a contractual or statutory requirement to be present, and the immediacy of the requirement to respond to an unusual event.
Reducing risks
What measures can employers implement to reduce their risk?
Pay the NMW/NLW and take the pain.
Restructure the business to ensure that existing workers aren’t doing sleep-ins;
In certain circumstances, argue that staff are on-call rather than sleeping in, so that the time is unmeasured and can be covered by a workplace agreement, though this is potentially problematic.
Watch this space…
Since the Employment Appeal Tribunal’s (EAT’s) decision in Shannon v Rampersad (t/a Clifton House Residential Home there may be times when on-call time will only be paid when an individual is awake for the purposes of working. Here a night care assistant in a residential care home was not “working” for the purpose of calculating the NMW simply by being “on-call” in his flat on the premises (where he was not required to be all the time). Only those hours when he was “awake for the purpose of working” counted towards the NMW.
The Court of Appeal is due to hear the appeal in this case next March.
