On the 13th July the Court of Appeal overturned earlier employment tribunal rulings and case law, clarifying that care workers on overnight ‘sleep-in shifts’ should receive a flat rate per night and not the national minimum wage (“NMW”).
The decision means care providers will not be liable for an estimated £400m, sector wide, back pay liability.
The Court found the NMW legislation’s clear intention was to distinguish between those available for work and those working. Clarifying the use of the sleep-in exception in the regulations.
Lord Justice Underhill, of the Court of Appeal said:
“For the reasons which I have given I believe that sleepers-in… are to be characterised for the purpose of the regulations as available for work… rather than actually working… and so fall within the terms of the sleep-in exception.
“The result is that the only time that counts for national minimum wage purposes is time when the worker is required to be awake for the purposes of working.”
Further uncertainty for care providers
While the ruling comes as a relief to many care providers, who were struggling with the prospect of funding and administering significant back-pay obligations, it leaves several unanswered questions, notwithstanding the possibility of a Supreme Court Appeal which could yet overturn the judgement.
HMRC last year set up the Social Care Compliance Scheme (“SCCS”) to provide a framework for employers to avoid penalties and pay back-pay obligations. Providers who signed up will now seek to understand if and how the scheme will be unwound and whether there will be any compensation for costs incurred or penalties paid under prior guidance.
Until HMRC issue further clarification and while the prospect supreme court referral exists, uncertainty will remain.