Sleep-in shifts and the National Minimum Wage
Many employers – in particular in the care sector – require their employees to “sleep-in” on site. But are the employees entitled to be paid whilst they’re asleep?
Originally, the government’s guidance indicated it was not necessary to pay employees for sleep-in duties. However, this guidance was changed in October 2016 following a number of Employment Tribunal cases which were decided during 2015 and 2016. The guidance now states that “where an employer requires a worker performing time work to be available at or near a place of work such hours are treated as working time”. In accordance with the law, working time must be paid at the rate of at least the national minimum wage (“NMW"). The guidance goes on to give the example of a worker “who is required to be in attendance to meet an obligation of the employer, such as a statutory requirement”.
In April this year, this issue was considered by the Employment Appeal Tribunal (“EAT”) in a case involving three employers including Mencap. The EAT emphasised that each case will turn on its own facts, however where a care worker works a sleep-in shift during which no specific tasks are allocated, the following factors (amongst others) will weigh in the balance to indicate that the NMW should be paid:
- a requirement to remain on the premises at all times during the sleep-in shift;
- the use of disciplinary proceedings if an employee leaves the premises during the shift; and
- a statutory or contractual obligation on the employer to ensure the presence of a care worker on site at all times.
This ruling and the recent change in the guidance has come as a major headache in the care sector, where traditionally care workers have typically been paid a flat rate in the region of £35 - £45 for a sleep-in shift. On the basis of an eight-hour shift, an employer paying a rate of £35 for a sleep-in shift would be underpaying an adult care worker by £25 per shift.
It is crucial to understand that this does not represent a change in the law, but rather a change in the understanding of how the law applies. In other words, the correct interpretation of the NMW legislation is that certain sleep-in shifts should always have been paid at the full NMW rate.
Following the change in the government guidance last year, HMRC – which is responsible for enforcing the NMW legislation via inspection visits – has been targeting care providers and issuing demands for back pay going back six years, together with penalties of 200% of the pay arrears.
A number of big players in the social care sector have raised this issue as a concern with the government. The arrears alone (excluding penalties) going back six years could cost the care industry in excess of £400 million. This is likely to send many charities and other care providers into insolvency. Mencap, together with other charities and private care providers, has highlighted to the government that the potential insolvency of hundreds of care providers could result in a crisis in the sector. This could result in many vulnerable people suddenly losing the support that they rely on.
The government responded on 26 July by issuing a statement confirming that:
- penalties levied by HMRC relating to sleep-in shifts which were worked before 26 July 2017 will be waived;
- arrears of NMW must still be paid to care workers for sleep-in shifts;
- from 26 July 2017 onwards, employers who underpay their staff for sleep-in shifts will be liable to pay penalties of 200% in addition to the arrears of NMW due; and
- HMRC will temporarily suspend its enforcement activity in the social care sector for sleep-in shifts until 2 October 2017, during which time it will discuss the crisis further with industry representatives.
Whilst this is good news, the crucial issue for care providers is to ensure that they are now paying the NMW for all sleep-in shifts. Any ongoing failure to do so could result in significant penalties.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.