The Court of Appeal has held that sleep-in shift workers are only entitled to the national minimum wage for the time when they are awake and therefore classed as “available for work”.
The decision is seen as a significant victory for care providers. They had previously warned that two-thirds of the employers in this sector would face bankruptcy if the decision was not reversed. The back-pay had been estimated to be about £400million. They are now relieved that they will now not have to fund this substantial back-pay.
Last year, a court had ruled that care workers should be paid the national minimum wage for every hour of a sleep-in shift, rather than a flat rate. The effect of this was to double the cost of a typical shift to £60.00. The court held that providers should be liable for six years of back-pay to sleep-in workers.
The case is a disappointment to unions who have been campaigning for improved pay and conditions in the care sector. The union, Unison, said that it thought that the decision was a mistake. It was considering an appeal to the Supreme Court. It believes that most care workers should be paid the national minimum wage for a sleep-in shift. This is because typically, they are on constant call and not free to leave their place of work. They regularly have to get up during the night to assist the client.
The case has brought clarity in its ruling that workers who sleep at a residential care home or similar place of work whilst being “on call” for emergencies are merely available for work and therefore not entitled to be paid the national minimum wage. This is until such time that they are actually called upon. However not necessarily all sleep-in shifts are covered by the ruling. The judgment was limited to the facts of the case. It is still not clear where exactly the line is to be drawn and each case will still need to be assessed on its facts. For instance there may be staff who are required to sleep-in and who are required to carry out regular checks on service users during the shift. This means that staff have to get up and provide support numerous times throughout the night.
It will be interesting to see how employers in the care sector will react to the ruling. Many larger care organisations have already increased their workers’ pay for sleep-ins to the national minimum wage. Having already budgeted for the additional costs, they may be reluctant to now change this as it may damage staff morale as well as introduce the risk of losing staff in a competitive recruitment market. They may also be worried about adverse publicity.
Cash-strapped local authorities that have increased their sleep-in rates could however now reduce them following the Court of Appeal ruling. Councils in England face a funding gap estimated at £2bn in adult social care.
One question following the ruling is what is going to happen to the Social Care Compliance Scheme. This was set up by the Government following the previous ruling that sleep-in shifts were subject to the National Minimum Wage. It is a voluntary scheme that gives providers a year to identify what they owe to workers. This is supported by advice from HM Revenue and Customs. It is not clear if HMRC will close the SCCS or wait for any appeal to the Supreme Court. Also will HMRC compensate providers it previously required to pay back-pay for staff involved in sleep-in shifts?
The judgment therefore leaves numerous questions that will still need to be resolved.