Supreme Court rules that sleep-in hours should not be counted for National Minimum Wage purposes

Workers who are permitted to sleep during the shift are not performing “time work” or “salaried hours work”

The long-awaited decision of the Supreme Court on the question of sleep-in shifts has now been issued. It confirms the decision of the Court of Appeal in 2018 that employers do not have to include all of the hours of a sleep-in shift when calculating whether workers are being paid the National Minimum Wage or National Living Wage (NMW).

The NMW rules on sleep-in shifts

The starting point is that a worker is entitled to be paid the NMW, taking into account time when they are actually working, or when they are available and required to be available at or near a place of work for the purposes of working.

But there are exceptions to this rule. A worker who is “available” for work rather than working will not have the time taken into account if they are at home or provided with facilities to sleep during that time.  In that case, only time when the worker is “awake for the purposes of working” will be counted, in other words when they are actually required to respond to a call or intervene to assist a client.

Case details: Tomlinson-Blake v Royal Mencap Society

Mrs Tomlinson-Blake was employed by Mencap as a care worker supporting two people with learning disabilities living in the community. As well as her day shifts, she took some sleep-in shifts, for which she was paid a fixed allowance. She had her own bedroom in the house and was permitted to sleep during the night.

The employment contract required Mrs Tomlinson-Blake to remain in the house and to intervene to support the clients when necessary during the night. This happened only rarely (six times in 16 months). She received additional pay for time spent assisting her clients during these shifts.

Mrs Tomlinson-Blake brought a claim alleging that she had not been paid the NMW when taking into account time spent on sleep-in shifts. An employment tribunal upheld her claim, following previous case law in finding that she was actually working throughout each sleep-in shift and not merely available for work. This was on the basis that Mencap had regulatory and contractual obligations for a care worker to be in the house at all times and that Mrs Tomlinson-Blake was obliged to remain in the house and to listen out in case she was required to intervene. In other words, it was part of her work simply to be there. The EAT agreed.

The Court of Appeal did not agree. In what was an unexpected judgment at the time, Lord Justice Underhill held that Mrs Tomlinson-Blake was “available for work” during her sleep-in shift, rather than actually working. Therefore only the time when she was required to be awake for the purposes of working counted for NMW purposes.

Lord Justice Underhill stated that an arrangement where “the essence of the arrangement is that the worker is expected to sleep” falls squarely under the exception set out in the NMW Regulations, that is when a worker is available to work but provided with facilities to sleep. He did not agree with the EAT that Mrs Tomlinson-Blake was actually working simply by being present on the premises.

The Supreme Court decision

The Supreme Court has now agreed with the Court of Appeal that sleep-in hours do not have to be counted, either in the case of “time work” (where workers are paid by reference to the number of hours they work) or “salaried hours work” (where workers are paid a set salary per annum). If the worker is permitted to sleep during those hours, they will not be counted when calculating whether the NMW is being paid. Only time during which the worker is awake for the purposes of working (responding to calls for assistance) must be counted.

Lady Arden noted that the Low Pay Commission’s (LPC) 1998 recommendations, which were taken into account by the Court of Appeal, could be presumed to have been implemented in the NMW Regulations 1999. This was because the Government was bound to implement them unless it provided reasons to Parliament for not doing so, which it did not do. The LPC recommendations were that workers who were required to be on-call and sleep on their employer’s premises (such as those working in residential homes) should not have the sleep-in hours counted for NMW purposes and that employers should agree an allowance for such work. Lady Arden comments in her judgment that the LPC “did not contemplate that a person in the position of a sleeper-in could be said to be actually working if he was permitted to sleep”.

Lady Arden made clear that: “If the employer has given the worker the hours in question as time to sleep and the only requirement on the worker is to respond to emergency calls, the worker’s time in those hours is not included in the NMW calculation for time work unless the worker actually answers an emergency call. In that event the time he spends answering the call is included…It follows that, however many times the sleep-in worker is (contrary to expectation) woken to answer emergency calls, the whole of his shift is not included for NMW purposes. Only the period for which he is actually awake for the purposes of working is included.”

Comment

This decision has been long-awaited and brings to an end a period of uncertainty and the risk of claims for very large pay-outs for historic arrears relating to sleep-ins, particularly for care sector employers. 

Of course, many such employers changed the way sleep-ins were paid to comply with previous case law decisions, amended HMRC guidance and the HMRC Social Care Compliance Scheme which followed those decisions.

Mencap, in its response to the judgment published on its website, has called for care workers to be paid more, stated its intention to continue paying top ups for sleep-in shifts, and for local authorities to fund these in their contracts.

Employers using sleep-in arrangements may now seek to change the way they are paid to reflect the decision of the Supreme Court. The pay structure for workers sleeping-in will depend on the wording of the contract in each case and will not simply change because of this ruling. Any changes to contractual arrangements must be agreed with the employee, or, where relevant, through collective agreement with trade unions. Employers seeking to impose such changes without employee agreement should be aware of the risks of unfair dismissal and unlawful deduction from wages claims which could follow. Having a sound and well-evidenced business reason for the change, which is clearly communicated to employees and their representatives and meaningfully consulted on, will reduce the risks and assist employers in defending claims if they are brought. It will not be enough to cite the Supreme Court’s decision in this case as the reason for the change.