Employers providing social care and other services where staff are required to be on call or on standby at or near their place of work, but are allowed to sleep when they are not working, are awaiting the court of appeal decision in Royal Mencap Society v Mrs C Tomlinson-Blake.
Mencap is appealing against an employment appeal tribunal decision in April 2017, that upheld an earlier employment tribunal decision in August 2016, that Mrs Tomlinson-Blake had to be paid minimum wage for the full time she was required to be at the home of a person she cared for. The court heard the appeal on 20 and 21 March 2018, along with other cases involving sleep-in work, and is expected to announce its decision "in the coming months". In one of the cases heard at the court of appeal, Shannon v Rampersad, the ET and EAT had ruled that the worker, Shannon, was not entitled to minimum wage while on call but not working.
Where a worker is provided with living accommodation or sleeping facilities at or near work and is required to be available on call or standby for all or some of the time, there is a statutory right under the National Minimum Wage Regulations 2015 (formerly 1999) to be paid at least national minimum wage for the hours the person is "awake for the purpose of working". In the past, this was interpreted as meaning the person is actually working, or is required to be on call or standby and is awake. Under this interpretation, minimum wage would not be payable when the worker was sleeping, and most social care organisations paid on-call sleep-in workers a flat fee of less than minimum wage for their shift, with minimum wage paid for the time they actually worked. HMRC internal guidance for its compliance staff, published after a Freedom of Information Act request, shows that until 9 March 2016, HMRC supported this approach. Solicitors for Care England, an organisation representing charities and other social care providers, emphasised this at the court of appeal.
However, employment appeal tribunal decisions in 2013 and 2014 (Whittlestone v BJP Home Support Ltd, and Esparon v Slavikovska) had confirmed that in most circumstances – and in particular where there is a statutory requirement for the worker to be present and/or where the worker would face disciplinary action if they left the premises – minimum wage is payable even when the worker is sleeping. These decisions were applied in the Mencap employment tribunal decision in August 2016, but it was not until October 2016 that the Department for Business, Energy & Industrial Strategy (BEIS) pubic guidance [see 5th bullet poit under Resources, below] was updated to reflect this.
In the employment appeal tribunal decision in April 2017, the judge emphasised that a multifactorial approach must be used in each on-call sleep-in situation. Factors to be taken into account when assessing someone is "working" for the purposes of minimum wage include:
The reason(s) for engaging the worker. If an employer needs someone to be on site at all times in order to comply with a regulatory or contractual obligation, it is more likely that the individual will be classed as working throughout their whole shift, even if they are asleep or have nothing to do.
- Restrictions on the worker's activities. A worker who is required to remain on the premises throughout their shift and who would be disciplined for leaving is more likely to be working for minimum wage purposes just by being present than someone who is able to come and go as they please.
- Level of responsibility. A care worker who must keep a listening ear throughout their shift and act if required is more likely to be working for their whole shift than someone who is on call from their own home and is only required to respond to an alarm pager for emergency call-outs.
- The immediacy of the requirement to provide services. This is not just about the speed with which a worker is required to act; it is also connected to the level of responsibility they have. The EAT compared a worker who must decide whether to intervene and then deal with the issues, with a worker who is woken by another member of staff who has immediate responsibility for intervening.
[This paragraph is from "Pay for sleep-in and on-call shifts", Russell-Cooke solicitors, May 2017:
If the court of appeal upholds the EAT decision, Mencap says its potential back pay liability, involving 3,500 staff over a six-year period, is £20 million, and it has been estimated that private and voluntary sector care providers could face a total bill of up to £400 million for six years' back pay. Care England's solicitors argued at the court of appeal that a flat fee of less than minimum wage should be acceptable for periods prior to 9 March 2016, when HMRC's own internal guidance did not require minimum wage to be paid for all on-call sleep-in time. If HMRC does require minimum wage to be paid for all hours, going back six years, some charities will become insolvent and have to close. Even if HMRC agrees that only minimum wage arrears since 9 March 2016 have to be paid, organisations will in future face higher wage costs for overnight shifts, pressure to increase pay for daytime workers who are not happy being paid the same as overnight workers who can sleep much of the time, and cuts in service provision because of the increased wages.
Mencap has said it appealed against the ET and EAT decisions not because it is against paying its staff "properly", but because the implications are so significant for the social care sector that clarity is necessary. Obviously the legal issue is whether the minimum wage regulations require on-call sleep-in workers to be paid minimum wage for the entire time they are on call. If the court of appeal finds that they are entitled to this, the issues become how far back HMRC should demand payment of minimum wage (six years? or only 9 March 2016, when HMRC withdrew its internal guidance saying minimum wage did not necessarily have to be paid for the whole time?). And if minimum wage arrears are backdated for six years, with no financial support from central government, what are the implications for the sector, the services it provides and the sector's service users/beneficiaries? And what are the long-term financial implications, especially for organisations which are charged a late payment penalty which is double the amount of back pay that has to be paid to the workers?
Social care charities are campaigning through the Voluntary Organisations Disability Group, Learning Disability Voices, the Association for Real Change and Care England for central government to fund or contribute to back pay costs, and for increased future funding from central or local government.
The social care compliance scheme
Because of these concerns, the government in July 2017 waived penalties (but not liability for the actual arrears) for sleep-in shift underpayments arising before 26 July 2017, and between 26 July and 1 November 2017 temporarily suspended enforcement for sleep-in shifts in the social care sector. It then announced, on 1 November, a voluntary social care compliance scheme (SCCS) under which employers who join would have up to a year to assess their own back pay liability, would receive technical assistance from HMRC to do this, and would then have three months to repay any wage arrears to workers (but these must be paid no later than 31 March 2019). The carrot is that organisations joining the scheme will receive technical assistance, will not face any financial penalty and will not be named and shamed; the stick is that those which do not join will face a full HMRC investigation, additional financial penalties (double the amount owed to workers, to a maximum of £20,000 per worker), and public naming and shaming. Needless to say, the sector and unions were not happy with this, especially as no new funding was announced.
Decisions about joining the scheme are made more difficult because of the uncertainty about when the court of appeal decision will be issued, and because there has been no indication of whether the government will provide any funding towards the back pay, despite them saying in November that they were "exploring options to minimise any impact on the sector".
"How sleep-in shifts became a crisis for charities", Civil Society, 8 December 2017
Overview of the history, the government's proposed way of dealing with the back pay, and issues with the scheme.
"Developments with sleep-ins: Are you paying the correct minimum wage?", Irwin Mitchell solicitors, 9 August 2017
How to assess what sleep-in workers should be paid.
Government press release on the social care compliance scheme, 1 November 2017
"Tell HMRC if you've underpaid national minimum wage in the social care sector", HMRC, 1 November 2017
"Sleeping between duties", p.29 in HMRC guidance on calculating minimum wage
"Sleep-in announcement: The key questions", Anthony Collins solicitors, 2 November 2017: via . Issues and questions about the social care compliance scheme and whether to join it.
"Pay for sleep-in shifts: new HMRC scheme", Russell-Cooke solicitors, 7 November 2017. Another look at the SCCS.
Press release by Care England, which represents many charities and other social care providers, when it was given the right to intervene in the Mencap appeal: http://www.careengland.org.uk/care-england-granted-right-intervene-court-appeal-sleep-shift-case.
"'Watershed' Mencap legal case heard in Court of Appeal", Civil Society, 22 March 2018. Background to the Mencap case and the issues raised at the appeal by both side's barristers and by the Local Government Association and Care England.
Employment appeal tribunal decision in Royal Mencap Society v Tomlinson-Blake, which Mencap is appealing against: https://www.gov.uk/employment-appeal-tribunal-decisions/royal-mencap-society-v-mrs-c-tomlinson-blake-ukeat-0290-16-dm
source sandyadirondack 28.03.18