The Supreme Court has today determined that sleep-in workers are not entitled to the National Minimum Wage (NMW) except when they are actually called upon to work. This will come as a great relief to employers in the care sector in particular, where reportedly the cost of back-pay for sleep-in workers would have been in the region of £400million.
Today’s Supreme Court decision follows years of litigation, which began with a decision of the Employment Tribunal published in 2016, which held that that the whole period of the Claimant’s sleep-in shifts at the employer’s premises constituted time work within the meaning of the National Minimum Wage Regulations irrespective of whether they were sleeping or not. This decision was then upheld in the Employment Appeal Tribunal in 2017.
Due to the significant impact of these decisions on the care sector and their ability to continue to provide care to the most vulnerable in society, the government implemented various measures to minimise the effect of these decisions. Most notably, on 1 November 2017 the government launched a compliance scheme for social care providers that had not paid NMW for sleep-in shifts. This enabled social care employers to opt into the Social Care Compliance Scheme (SCCS), giving them up to a year to identify what they owed and a further three months to make the payments.
In its first six months, the SCCS identified a total £735,494 of arrears owed to 479 workers. However, it is unclear how much of that money was paid over to employees as in 2018 the Court of Appeal overturned the previous Tribunal decisions, concluding that employees were not entitled to be paid the national minimum wage for the whole of the sleep-in shift, but only for the time when they were required to be awake for the purpose of working. No doubt those in the care sector breathed a sigh of relief at this point, but as that decision was appealed to the Supreme Court, it is only today that employers in the care sector have achieved the certainty that is long overdue.
However, please note that this ruling does not apply to those working night-shifts who are expected to remain awake and available during their shift; those workers will continue to be entitled to the NMW. Also, this decision does not affect the rules relating to working time, under the Working Time Regulations 1999, which will still need to be adhered to.
Employers in the care sector will now need to carefully assess what impact this decision has on their operations; employers who had already taken the step of increasing the pay of those working sleep-ins may not now be able to roll-back from that, unless they have reserved a contractual right to do so. However, we recommend that those employers who are affected by this decision take legal advice as the facts of each case will determine what action can be taken and indeed whether any payments already made can now be recovered.
If you would like advice about the potential implications of this decision for your business, please do not hesitate to contact us.
This is only intended to be a summary and not specific legal advice. If you would like further information or advice on employment status or generally, please do contact a member of our employment law team.