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When is sleep work?

December 2017

The National Minimum Wage for sleep-ins for social care providers

The issue

Sleep-ins are where a worker is present at their workplace, but for part of that time, they may be permitted to sleep. Sleep-ins in the social care sector are very common.  For example, a professional may be on hand to provide specialist or emergency care to vulnerable patients or care home residents. However, sleep-ins have legal implications.  This is because employers need to pay the National Minimum Wage (“NMW”) for all hours worked.  The question, which has a massive financial impact for care providers, is whether all time during the sleep-ins is to be classed as work, or just that time when the employee is awake and performing active duties.

The law

What amounts to work during a sleep-in was recently considered by the Employment Appeal Tribunal (“EAT”) in Royal Mencap Society v Tomlinson-Blake (UKEAT/0290/16). Mencap employed a support worker for people with learning difficulties.  The support worker was required to remain at Mencap’s premises between 10pm until 7am, in case her support was required.  In the Mencap judgment, the Employment Appeal Tribunal found that the total duration of the sleep-in counted as work.  Crucially, the support worker was required to be present and would have been disciplined if she left her post.  This meant that Mencap had breached its legal obligations, because when taken together, the amount it had paid the worker fell below the NMW for the entirety of the sleep-in period.  While the support worker was called upon occasionally during a sleep-in, the need for her to intervene was genuine. The fact that the support worker was entitled to sleep did not deter this finding.  The EAT found that the test to be applied on a case-by-case basis is a multifactorial one.  The first step is to check what the worker’s contract states about working hours.  In addition, the EAT set out four potentially relevant factors for consideration:

  1. The employer’s purpose for engaging the worker;

  2. The extent to which the worker’s activities are restricted by the requirement to be present and at the disposal of the employer;

  3. The degree of responsibility undertaken by the worker and the types of activities that they may be called upon to perform;

  4. The immediacy of the requirement to provide services if something untoward happens or an emergency arises.

Mencap has appealed against the EAT judgment that the entire sleep-in amounted to work. The Court of Appeal are due to revisit this case. Meanwhile, the law remains uncertain pending this appeal.

Enforcement

The repercussions of non-compliance with the NMW legislation are twofold: Enforcement by HMRC can include investigating and then imposing civil and criminal penalties on employers, including fines of up to £20,000 per breach. Enforcement by any individuals would usually involve individuals bringing an unlawful deduction from wages claim in the Employment Tribunal, or a breach of contract claim in the civil courts.

The Social Care Compliance Scheme

The Mencap (and related) judgments have had a real impact for social care providers, as it has significantly pushed up their costs.  This has been made particularly acute given the substantial rise in the NMW in 2016, and also the fact that this applies to past work, as well as to the future.  Given the financial squeeze on many of these companies in any event, the additional liability is capable of causing significant financial distress.  The Government has recognised that this is such a critical issue.  As a result, it announced that financial penalties would be waived in respect of shifts underpaid before 26 July 2017 and HMRC enforcement activity was temporarily suspended.

On 1 November 2017, financial penalties in respect of failures to pay the NMW to sleep-in staff were reinstated, subject to a new Social Care Compliance Scheme (the “SCCS”). By opting into the SCCS, social care providers will have one year to acknowledge and self-assess their underpayment liabilities and then up to three months to pay arrears to the affected workers. If arrears are paid by the deadline (which will be no later than 31 March 2019 as this is the date that the SCCS expires), then the social care provider will not be subject to financial penalties or the prospect of being named and shamed on the Government’s website in the usual way.

Although please note that HMRC has the ultimate discretion whether an organisation can opt into the SCCS or not.

What should a social care provider do?

Many employers will be tempted to enter the SCCS, given that it provides some protection from penalties.  However, this may not be the best plan.  Mencap are appealing the EAT judgment, and there are many that believe the Court of Appeal may reach a different conclusion.  At the very least, the Court of Appeal is likely to provide robust guidelines as to when sleep-ins constitute working time.

As a first step, we suggest social care providers consider the Mencap judgment and decide whether their practices would be caught by it in the same way: not all sleep-ins practices will. Following this, a proper assessment can be made as to whether the SCCS provides the best option, or whether it is preferable to adopt a “wait and see” policy.

However, this “waiting” approach is not without risk. Within the relevant time, a worker or a third party could complain to HMRC about sleep-in arrears and/or start an Employment Tribunal claim (especially given that a claimant no longer has to pay any Tribunal fees).  In such a situation, there is nothing to prevent HMRC from investigating the organisation outside of the SCCS.  There are no easy answers, and given the liabilities involved, it is worthwhile conducting a careful assessment.

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