The Court of Appeal has today (13 July, 2018) overturned government guidance that entitled carers to the National Minimum Wage (NMW) for sleep-in shifts.
During its decision, the Court ruled that only hours spent awake counted as ‘worked’ hours, meaning carers can continue to be paid a flat rate for sleep-in shifts, and are no longer eligible to six years’ worth of back pay.
The Court’s ruling is a big victory for the care sector. The government’s guidance – which did entitle carers to the NMW for sleep-in shifts – threatened to put as many as two in three employers in the care sector out of business by the end of March 2019.
Prior to October 2017, carers working sleep-in shifts were generally paid a flat rate ‘sleep-in allowance’ of between £25 to £35 while they were asleep, and only entitled to the NMW for hours they were called on to work during the sleep-in shift.
However, the Department for Business, Energy and Industrial Strategy (BEIS) updated its guidance to reflect carers’ rights to the NMW following two tribunal cases (in 2015 and 2017), in which the tribunals determined that carers were entitled to the NMW for all sleep-in hours.
This meant that at the time, when the National Living Wage (NLW) was £7.50 an hour, carers would be entitled to £60 for eight hours of sleep – around double their previous pay.
The appeal that lead to today’s ruling came from the learning disability charity Mencap, who said that the 2017 decision could have cost the care sector £400m in back pay alone.
Both unions and social care groups have criticised the government, whose decision to update its guidance following the tribunal ruling last year created “false expectations” for carers who will now no longer receive the back pay and NMW entitlements they were promised.
A word from us
Dave Hewitt, our Head of Employment Law Information, commented: “This has to be a victory for common sense. In my view, looking at the background to the NMW Regulations, they were never intended to give an entitlement to full pay when on a sleep-in.
“It’s also regrettable that the government and HMRC took such early action when they knew that the 2017 decision was being appealed to the Court of Appeal and could be overturned.”
GET A FREE CONSULTATION
Get in touch to organise a free audit of your business.