The Court of Appeal has today (13 July 2018) handed down judgment in the cases of Royal Mencap Society v Tomlinson-Blake and Shannon v Rampersad (t/a Clifton House residential Home). You can read the full judgment here or by clicking on the link on the right. 
In a very clear decision, the Court of Appeal has found that it is only time spent awake and working during a sleep-in that counts as working time for National Minimum Wage purposes. The sector can now breathe a huge sigh of relief as the prospect of a £400 million back pay bill has disappeared, for now, in light of the Court of Appeal’s clear decision. 

Introduction

Our view is that the conclusion reached by the Court is the correct interpretation of the law. We have always taken the view that it was never the intention of Parliament that all hours of a sleep-in should count for National Minimum Wage purposes. This is because the Regulations were seeking to implement recommendations of the Low Pay Commission that included that providers should be able to continue to pay a flat rate in respect of sleep-ins, provided workers were paid the National Minimum Wage (NMW) when they are awake and working. 

In fact, in 2014, we made submissions to the Government as part of the Consultation on draft Consolidated National Minimum Wage Regulations where we wrote:

“We do not believe that would have been Parliament’s intention when drafting Regulation 15(1A) [now Regulation 32]. That provision was, in our view, designed to ensure that where a worker who sleeps at or near a place of work and is provided with facilities for sleeping and is permitted to use those facilities for sleeping, they are only carrying out time work when the worker is awake and carrying out duties. […] We believe our interpretation of Parliament’s intention is reflected by the Low Pay Commission’s recommendations made at the time the legislation was introduced. We therefore consider that it is clear from the government guidance that the intention behind Regulation 15(1A) was to ensure that somebody working a sleep-in would not be entitled to the minimum wage for every hour of that sleep-in.“

The drafting of the legislation reflected this, and it was the practice adopted universally across the sector for many years. Sadly, the case law took various wrong turns over the years causing a huge amount of confusion amongst providers and their workers and, most recently, significant HMRC enforcement activity and the Social Care Compliance Scheme.     

So how have the Court got to this conclusion and what are the implications for providers and their staff?

The Court of Appeal’s Reasons

The Court of Appeal found that the Low Pay Commission recommendations were of fundamental importance to the appeal and considered them extensively in reaching their conclusion.

The Court accepted that it was clear the drafting of the legislation was such that there are two separate kinds of time work – actual work and availability for work under Regulation 32. Regulation 32 provides:

“(1) Time work includes hours when a worker is available, and required to be available, at or near a place of work for the purposes of working unless the worker is at home.

(2) In paragraph (1), hours when a worker is “available” only includes hours when the worker is awake for the purposes of working, even if a worker by arrangement sleeps at or near a place of work and the employer provides suitable facilities for sleeping.”

The Court found the “self-evident intention of the relevant provisions is to deal comprehensively with the position of sleep-in workers”. In cases where “the essence of the arrangement is that the worker is expected to sleep” the Court decided it was not necessary to consider whether someone who is sleeping is actually working rather than being simply available for work. This is a fundamental point that means that previous cases such as Whittlestone, Esparon and the Mencap EAT decision are wrongly decided.

The Court of Appeal distinguished the leading Court of Appeal case of British Nursing Association, which had found that staff on their emergency-bank-nurse booking service were working when delivering the service throughout the night whilst at home. The Court highlighted that was a case where the workers were actually working as they were essentially delivering the same service at night as they did in the daytime. The fact that there were significant slack periods did not mean they weren’t working. The Court of Appeal stated:

“There must be many kinds of work where specific tasks only come up intermittently but where for the purpose of the Regulations a worker remains “actually” working even during periods where they have nothing to do.”

The Court considered a case where there are slack periods in work to be quite different to one where the arrangement is that the worker is expected to sleep. The Court highlighted the:

“basic artificiality of describing someone as “working” – still more, as actually working – during a shift when it is positively expected that they will spend substantially the whole time asleep.”

The Court also highlighted that the opposite conclusion would have:

created a very awkward discrepancy between the treatment of time spent sleeping-in for the purpose of time work and salaried hours work and the treatment of the employee’s overnight on-call time in a case involving unmeasured work, as expounded in Walton.” This is a point we have been highlighting for many years and was pursued by our client, Care England, in their intervention.

Live-in care providers who have structured their arrangements using Daily Average Agreements, relying on the Walton case, will take significant comfort from this aspect of the decision.

So is this a conclusion to the saga?

Lawyers for the workers were refused permission to appeal at this stage. We hope that given the common-sense view taken by the Court of Appeal, and the Court's decision to refuse the permission to appeal, they will now accept that the intention of Parliament was never that a sleep-in should attract the National Minimum Wage and that a flat rate payment is sufficient in respect of the period of availability of a sleep-in.  There is however a possibility that permission to appeal will be sought in the next 28 days from the Supreme Court.

So what should providers do now?

There are many questions to consider. Does the judgement cover your specific sleep-in arrangements? Should you remain in the SCCS scheme? Do you end paying NMW for sleep-in or remove Top ups? What will happen with the additional payments Local Authorities have been paying for Sleep ins?

How can we help you?

We have given some initial thought to those questions and on next steps in a further briefing that can be obtained by emailing regena.hodgson@anthonycollins.com.   

If you require further advice on this issue, please contact your usual contact in our employment team or speak with Matthew Wort or Anna Dabek.