The Court of Appeal (COA) has overturned the Employment Appeal Tribunal’s (EAT) decision in the case of Royal Mencap v Tomlinson-Blake, by ruling that sleep-in shifts do not attract the National Minimum Wage (NMW). This case involved a care worker who was contractually obliged to spend the night at, or near, her workplace and was expected to sleep for most of the shift, but could be woken to carry out work, if assistance was required. The worker received a fixed sum for the sleepover shift, but would receive additional payment if she was called upon during the night. Ms Tomlinson-Blake argued that she should receive the NMW for the entire shift and, therefore, claimed that she had been underpaid by her employer, as the payment she received was less than this.
The Employment Tribunal and the EAT followed previous case law on the topic, and found that Ms Tomlinson-Blake had been underpaid, as she should have received the NMW for the entire shift. However, the COA found that only time spent awake and working should be included in the calculation of NMW payments and that previous decisions holding that sleep-ins should attract the NMW were wrongly decided. Essentially, the COA found that if the essence of the contractual arrangement is that the worker is expected to sleep and facilities for that purpose are provided, the NMW will not be payable. However, in cases where sleeping is incidental and there are no proper sleeping arrangements, for example night time security, the NMW may still be payable.
A number of social care providers have already altered their contractual provisions on sleep-ins and now pay the NMW for the entire shift in order to comply with the previous case law in this area, with local authorities supplementing the additional income stream required to make these payments to staff. Therefore, any attempt to stop these payments without agreement/consultation could give rise to unlawful deductions and constructive dismissal claims. Moreover, permission has been sought to appeal the decision to the Supreme Court and, therefore, it is possible that the COA decision could be overturned. Nevertheless, employers should consider making their staff aware of the decision and the changes that may need to be made going forward, depending on the outcome of the appeal and any local authority spending reviews.
For providers that have not incorporated the NMW into sleep-in shifts, consideration should be given to making financial provision for this in the event the decision is overturned at the Supreme Court and back pay claims become a reality. However, if the decision is upheld, no change will be required and, therefore, a status quo position should be adopted at present for those companies that have not made any changes.
Furthermore, HMRC has announced that it is considering how the decision impacts the social care compliance scheme that companies in the sector were encouraged to sign up to in 2017, in order to avoid being fined or “named and shamed” for failing to pay staff the NMW. HMRC guidance is expected to be issued on this topic in the next few weeks.
Any members of Scottish Engineering who are concerned about the implications of the decision should get in touch.