The Lifeline Project was a well-regarded charity. Failure to carry out the targets within the contracts led the charity into insolvency and resulted in a personal, 7-year disqualification order.
However, the recent case of City of Edinburgh Council v Lauder makes it clear that in certain circumstances only time spent awake for the purpose of working counts as working time.
Workers are entitled to receive a minimum hourly rate of pay, i.e. the national minimum wage (‘NMW’). This is currently £6.19. In order to calculate whether a worker has received the NMW, their average hourly rate is determined by dividing the wages earned over the relevant pay reference period (i.e. the period for which workers are paid, usually a week or a month) by the hours worked during that pay reference period. This work may be "time work", "salaried hours work", "output work" or "unmeasured work", depending on the way the worker is paid for the work.
The case discussed here concerned salaried hours work, which is work where the employee is paid for a fixed number of hours work a year, and is paid an annual salary in equal weekly or monthly instalments. The judgment also applies to time work, which is work that is paid by reference to the time that a worker works, for example hourly-paid work.
NMW legislation and time on-call
Under NMW legislation, it would appear that any time when a worker is available at or near a place of work for the purpose of carrying out their duties, and is required to be available for such duties, should be treated as being working time (unless the worker is at home). The point that is often missed however is that the legislation further provides that, if a worker is provided with facilities for sleeping at/near the place of work or the worker’s home is at or near their place of work, the time they are permitted to use those facilities to sleep or to be available for work or has been called upon to work shall only be treated as being salaried hours work or time work when the worker is awake for the purpose of working.
The case law in this area has unfortunately been confusing, with on-call time on occasions, and based on similar facts, being found to count as salaried hours work / time work for the purposes of the NMW legislation and in other cases found not to be time to be counted as working hours when calculating if an employee has received the NMW.
In this recent case of City of Edinburgh Council v Lauder and others the Employment Appeal Tribunal (EAT) provided useful guidance on the topic, which should hopefully reduce any confusion in the future.
City of Edinburgh Council v Lauder and others
The case concerned sheltered housing wardens who were provided with tied accommodation, free of rent and council tax. They worked five days a week between 8.30-17.30, and agreed under an occupancy agreement to be resident at their tied houses for four nights a week in case of emergencies. Subsequently, they brought claims under the NMW legislation alleging that the Council had paid them less than the NMW. They argued that the hours that they were required to spend at their tied houses overnight should be included as salaried hours work when calculating their average hourly wage. Inclusion of these hours meant the Council was in breach of the NMW as this led to the hourly wage being less than the NMW.
The Employment Tribunal originally upheld this claim. This was reversed by the EAT who ruled that the wardens were not entitled to receive the NMW for time during which they were required to respond to an alarm system in residents’ accommodation but were asleep, i.e. they were on call. The EAT emphasised the distinction, for the purposes of assessing entitlement to the NMW, between cases where a worker is required as part of their core duties to work during the night and cases where a worker is required to be "on call" in addition to their core duties. The EAT confirmed that where a worker is carrying out their core duties at night, the whole night will count as working time for the purposes of the NMW, even if tasks only come up intermittently and the worker is free to sleep between those tasks. However, where the worker is not carrying out work of the essential nature of their job during the night, the NMW legislation applies with the effect that only time spent awake for the purpose of working counts as working time for the purposes of the NMW.
Organisations that require workers to work overnight and provide facilities for sleeping should consider carefully whether the hours spent sleeping should be included as working time in calculating the workers’ average hourly wage. If it is part of the workers’ core duties to work during the night then these hours should be included, and the workers should be paid amounts so that the average hourly wage is at least the NMW. If however, the worker is on call in addition to their core duties, following from the EAT’s decision, only the hours spent awake for the purpose of working will need to be included in the calculation of the workers’ average hourly wage.
For more information
For further information on the National Minimum Wage and the Working Time Legislation please contact Matthew Wort on 0121 214 3501, email@example.com or Faye Rush on 0121 214 3544, firstname.lastname@example.org.
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