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HCR Law Events

19 May 2021

Sleep-in pay – how does HMRC guidance affect pay

The March 2021 Mencap judgment on sleep-in pay made it clear that a worker, often in the health and social care sector, but also perhaps in boarding schools or in security work, is only entitled to the National Minimum Wage (NMW) when they are awake for the purposes of work as opposed to their whole shift.

HMRC had been previously required employers to pay NMW for the entire shift – yet in practice some employers may not chose to implement the change across the board, even now. After the judgment, the chair of Royal Mencap Society said: “We and many other providers have been paying for sleep-ins at a higher rate for over a year now, and we intend to continue despite the court’s decision.”

But HMRC has updated its guidance in the light of the judgment. In brief:

Q: Spending time awake but woken only occasionally to perform tasks?

A: Not entitled to NMW unless awake for work purposes.

Q: Taking calls on a nightshift?

A: Eligible for NMW for time spent awake for the purpose of calls and any other duties.

Q: Permitted to nap during working shift?

A: Probably eligible for NMW for the entire shift.

Q: Woken to deal with emergency but not required?

A: Still awake for the purposes of working and eligible for NMW.

Q: Woken frequently contrary to original expectation?

A: If, in practice, little sleep is possible, a worker probably ceases to be a sleep-in worker and is entitled to NMW for the entire shift.

Employers may look to change their pay policy, with the risk of disrupting employee relations; they should seek expert advice as appropriate, because attempts to vary contracts of employment unilaterally may result in costly legal action such as constructive unfair dismissal claims.

Rebecca Leask, who leads our health and social care sector, said: “This has been a huge issue in the care sector for our clients for several years, and whilst the legal position is now settled, it will continue to be vitally important to understand the latest HMRC approach and how this will flow through transaction and other legal documents. The landscape has changed considerably for many clients and it is important to make any associated changes with workers with due care.”

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About the Author
Sarah Woodall, Head of Tax, Partner (Barrister)

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