The outcome of this appeal is a significant issue for the care sector as the ability of many care sector organisations to afford to pay the NMW for a night-shift rather than a lesser fixed allowance, is not possible.
The appeals relate to the calculation of the NMW for the time spent by two care workers on "sleep-in" shifts. The individuals had an arrangement whereby they were permitted to sleep at or near their place of work. The appeals are in respect of "salaried hours work" and "time work". One employee was salaried and the other was hourly paid. Both undertook sleep-ins. In general, time when a worker is required to be available at or near his or her employer's place of business for the purposes of doing time work is included in calculating time work and salaried hours work but there are exceptions. This case considered the sleep-in exception.
What is the sleep-in exception? Employers can take advantage of the sleep-in exception where an arrangement is made for the worker to sleep and is given facilities for doing so. Workers on sleep-in shifts will only be entitled to have their hours count for NMW purposes if they are, and are required to be, awake for the purpose of working.
Mrs Tomlinson-Blake was successful at the Employment Tribunal and the Employment Appeal Tribunal in asserting that time spent on a sleep-in shift should count towards the NMW. Mencap appealed to the Court of Appeal and were successful. The Court of Appeal found that "Sleepers-in" are "available for work" rather than "actually working" and so fall within the sleep-in exception under the NMW legislation. Mr Shannon's case was based on similar facts and the Court of Appeal found in favour of the employer. Mrs Tomlinson-Blake and Mr Shannon appealed to the Supreme Court.
The Supreme Court
The appeals by Mrs Tomlinson-Blake and Mr Shannon were dismissed. The Supreme Court gave weight to the recommendations of the Low Pay Commission that sleep-in workers should receive an allowance and not the NMW unless they are awake for the purposes of working. The Court concluded that if the worker is permitted to sleep during the shift and is only required to respond to emergencies, the hours in question are not included in the NMW calculation for time work or salaried hours work. Such hours should only be included when the worker is awake for the purpose of working. The entire shift should not therefore be taken into account for this purpose. The difference in being hourly paid or salaried did not matter.
It is worth noting that Lord Kitchen emphasises the importance of reading the legislation in a holistic way in order to avoid error. When analysing case law and agreeing with a previous judgment of Lord Underhill's, Lord Kitchen goes on to confirm:
" ..it would not be a natural use of language, in a context which distinguishes between actually working and being available for work, to describe someone as working when she is positively expected to be asleep (and, I would add, may well be asleep) throughout all or most of the relevant period."
This decision will come as a welcome relief for employers in the care sector. As highlighted above, the affordability of paying the NMW for sleep-in shifts is questionable for many care sector organisations. Employers would not only have had to budget for the increased cost going forward, but would also have been at risk of back pay claims of up to six years for a civil claim (two years for an unlawful deduction from wages claim in the Employment Tribunal).
This case clarifies and simplifies the position and is a final decision.
The legal framework surrounding the NMW is notoriously complex and remaining compliant is no easy task. Many employers have inadvertently fallen foul of the law by committing a technical breach. Any breach of the NMW can have significant consequences for employers with the "name and shame" regime and HMRC's enforcement powers. A small breach can have serious repercussions, from negative publicity to substantial fines. Whether managing employee queries or navigating HMRC audits, we can help support you with the challenges presented by the NMW.
If you need any assistance with the issues raised in this update please do not hesitate to get in touch.