All workers are entitled to receive the appropriate National Minimum (or Living) Wage (“NMW”) for any sleep-in work they undertake that constitutes working time. Whilst that sounds straightforward, in reality it can be very difficult to determine whether an individual asleep for part or throughout their shift is legally considered to be working during this time.
This ambiguity can cause real difficulties for employers, many of whom are already working on very tight financial margins not least because, if they get it wrong, HMRC can order a business to repay underpaid staff, impose fines (up to £20,000 per underpaid worker) and name and shame it on a national online register.
Campaign groups have warned the government that if all sleep-in duties have to be paid at the NMW rate (rather than a reduced flat rate) it will cost the sector up to £400 million and will put many care homes out of business.
Background: The NMW Regulations 2015
The starting point for employers is to work out which NMW categories apply to their staff from the following:
Salaried work – this is where workers are required to work a basic number of hours each year under their contract and are paid an annual salary in equal weekly or monthly amounts.
Time work – this is where workers are paid by the hour. Different rates often apply for working different shift patterns.
Output work – this is where workers are paid per task they perform or piece of work they do and is only available when the employer doesn’t agree hours of work with a worker. This type of arrangement is not usually appropriate for carers.
Unmeasured work – includes work in respect of which there are no specified hours and the worker is required to work when needed. Care workers who undertake unmeasured work will be paid by reference to something other than time – for example, the market rate or complexity of a task/the needs of the service user they are caring for.
These categories depend on the way the worker’s pay is calculated rather than the duties they carry out.
When is a sleep-in worker ‘working’?
If you engage care workers on a salary or pay them by the hour (categories 1 and 2 above) the following factors must be considered to work out when sleep-in duties have to be paid:
1. Why the worker is required to be on call or carry out sleep-in duties
If the worker is engaged to meet a legal or contractual obligation owed by their employer to their clients then the worker is likely to be working, even in circumstances where they have little or nothing to do during certain hours. In the context of a care home, a certain number of workers may be required to be onsite to meet minimum standards required by law.
2. The extent to which the worker’s activities are restricted
If the worker is told that they must remain on the premises throughout their shift and, for example, could be subjected to disciplinary action for breaching this, they are likely to be working throughout their shift, even if they do little or nothing during that time.
3. The degree of responsibility the worker holds
A worker required to remain on the premises, for example, to deal with calling the emergency services in the case of a break-in or fire, will usually be considered to have a lower level of responsibility than a worker required to respond to any problems experienced by a resident in the night. The more responsibility held, the more likely the individual will be working throughout their shift, even if they only occasionally have to intervene.
4. Whether the worker is primarily responsible to provide services in an emergency
A worker who is responsible for providing care or assistance to deal with emergency situations is likely to be working throughout their shift, even if there is no emergency. However, a worker who is woken to assist a colleague who has the primary responsibility for dealing with emergencies, may only be entitled to be paid the NMW for work they actually do.
Please note, none of these factors are more important than any other and the weight attached to each one will vary from case to case. This means that it will continue to fall upon employers to make a call about whether a worker is entitled to be paid whilst they sleep.
Sleep-in workers that are not working during their sleep-in shifts are only entitled to be paid the NMW if they are required to work during this time.
Government guidance
Guidance issued by the government in April 2017, broadly follows this advice:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/605397/nmw-nlw-calculating-minimum-wage-guidance.pdf
The court’s approach – a recent decision
In Mencap v Tomlinson-Blake, Mencap were contracted to provide support and care to vulnerable adults. Ms Tomlinson-Blake and others carers provided 24-hour support to two men in their home. She was paid by reference to the hours she worked and worked either a day shift or a sleep-in shift. The sleep-in shift lasted 9 hours and was paid at a flat rate of £29.05. Ms Tomlinson-Blake had her own room and could sleep during the shift, but was required to keep “a listening ear out” during the night and provide support where needed and to respond to any emergencies. The need was said to be “real but infrequent” and Ms Tomlinson-Blake had only had to intervene on six occasions during the previous 16 months.
The Employment Appeal Tribunal said that she was entitled to be paid the NMW for her sleep in shifts because she constantly had to use her professional judgment and her detailed knowledge of the residents to decide whether or not to intervene. In addition, Mencap was fulfilling its regulatory obligation to have someone at the premises.
If a worker is working during a sleep-in, does every hour of that shift have to be paid at the appropriate NMW rate?
No. The obligation to pay the appropriate NMW rate does not mean that every hour has to be paid at that rate. Instead, employers must make sure that the average hourly rate over what is known as the pay reference period is at least the NMW. A pay reference period is a month or the worker’s pay period if shorter. The NMW is calculated by dividing the total eligible earnings earned in a pay reference period by the number of hours worked during that period.
However, not all payments received during the pay reference period are included in this calculation. Enhancements paid for working during unsocial hours, weekends and public holidays are not taken into account cannot be used to make up any shortfall in the amount paid for relevant sleep-in duties.
For example, if the care worker usually receives £7.50 per hour for working days, but receives £9.50 per hour for any overtime or weekend working involving the same duties, only £7.50 per hour is taken into account in respect of all shifts worked.
Basic contact hours: 8 at the rate of £7.50 per hour = £60.00
Antisocial contact hours: 2 at the rate of £9.50 per hour = £19.00
Total pay received = £119.00
Total pay for NMW purposes: £119.00 – (2 hours x £2.00= £4.00) = £115.00
NMW amount due to worker: £7.50 x 18 hours = £135.00
In this example the worker has been underpaid NMW by £20.00
HMRC will pursue employers for non-payment of the NMW, even in circumstances where the total pay received by individual workers exceeds the appropriate rate. Employers must therefore take care to ensure that the calculations are based on eligible earnings rather than total earnings.
Is there another way of calculating NMW for sleep-in duties?
Yes, it might be possible to agree that sleep-in duties are unmeasured time. This is because workers are either working or they are not during unmeasured time. There is no distinction between periods of working and periods of being “available” for work which complicates the picture for workers being paid on a salaried or time basis.
To achieve an alternative, the parties must enter into a legally binding “daily average agreement” which sets out the average hours the worker is likely to spend working (rather than sleeping) during night shifts. Provided this represents a realistic number of hours likely to be worked, and the hourly rate of those hours meets the NMW the employer can pay a flat rate.
A word of caution…
Treating the sleep-in as unmeasured work and entering into a daily average agreement could provide a solution to employers who are unable to pay their workers NMW for the duration of sleep-in shifts. However, this legal argument is yet to be tested in the tribunal and advice should be obtained, particularly in circumstances where businesses want to change the terms and conditions of existing staff to include unmeasured time.
Published: 7 August 2017
Employment Law Update - August 2017
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