If you snooze you lose - the end of NMW for sleep in shifts

Calculating pay for employees who have atypical working patterns is often difficult and the recent decision of the Supreme Court in Royal Mencap Society v Tomlinson-Blake has provided some helpful clarity. The decision will be particularly relevant to businesses with employees who "sleep in” during their shift and will be welcomed by employers in the care sector which has been in a state of uncertainty on this issue for several years. With this decision the risk of extensive claims for back pay has disappeared and will allow care sector employers to reallocate funds which they have held in reserve for such claims.

Calculating wages during "sleep in" shifts can be confusing because it is often unclear whether employees are "working" throughout their shift (including periods when they may be asleep) or just when they are available to undertake their duties. This confusion may be compounded by a cultural objection to paying employees to be "asleep on the job” which causes some employers to consider pay arrangement for “sleep in” shifts in a dogmatic fashion.

In the recent Mencap decision the Supreme Court confirmed that employees who are expected to sleep during their shift and will only be woken infrequently, will be entitled to National Minimum Wage when they are awake for the purposes of work. If the worker has been given the hours of the shift to sleep, with a requirement to be "on-call" for emergencies, the worker's time is not included in the calculation for National Minimum Wage unless the worker is required to answer an emergency call. Time when the worker is awake dealing with emergency requirements will be included for the calculation of National Minimum Wage but not the time when they are asleep.

A surprising decision?

Under the National Minimum Wage legislation workers are regarded as "working" (thereby creating the obligation to pay them wages) when they are required to be available for work at, or near, a place of work other than their home except where a worker by arrangement sleeps at work. However in a number of cases during the years leading up to 2018, judgments in various Employment Tribunals and on appeal had suggested that in contrast with the wording of the legislation, sleep in time could be included in the calculation of “time work” in some circumstances. The Mencap decision addresses this issue and with no prospect of further appeal the situation now seems to have been settled.

The impact on your business

For businesses which “gambled” on the outcome of the Mencap case and retained policies of not paying workers for sleep in shifts (unless they were awake for work), there should be no requirement to alter their position. They should be able to continue as before with no significant legal risks.

Businesses which changed their policies and began paying staff for the duration of their whole sleep in shift face a more challenging situation. A pattern of paying workers for sleep in shifts may have created a contractual obligation and any change to remove payment for sleeping time could be a breach of contract and may result in claims for “unlawful deductions from wages” in the Employment Tribunal. Care providers may face a difficult decision about how they address payment for sleeping time. We would recommend that businesses should obtain documented consent from employees on an individual basis to any change to reduce their pay. The mechanics of managing this transition may be challenging in a sector which is already facing recruitment and retention problems. Reducing pay for employees will make it more difficult to recruit and retain motivated staff and while the legal position may now be clear, there will be significant people management requirements to achieve any costs savings.

If you have any questions about the Mencap decision, or the impact of the decision upon your business or employment terms please do not hesitate to contact a member of the Burnetts Employment & HR Team at hello@burnetts.co.uk or 01228 552222.