Staff pay is a major concern for care businesses and in particular, how care homes should pay their staff for ‘sleep-in’ shifts. For many businesses, the potential for claims for back pay is a significant worry, with the overall impact on the sector estimated to be more than £200 million. Coupled with HMRC taking a keen interest in the care sector, the issue is a key factor in business viability in a market where margins are squeezed and profits slashed as a result of local authority social care funding cuts.
The ruling published last week reaffirms that this is a complex issue and sets out four factors which will be taken into account when determining whether a sleep in shift should be treated as “time work” – and therefore payable at the National Minimum Wage (NMW) for the entire shift, or if the entitlement to NMW only applies when staff are awake and carrying out duties. The four-part test is multifactorial and no single factor outweighs another so each case will be decided on its merits; an uncertain position for care operators
In handing down the decision, the Employment Appeal Tribunal (EAT) recognised the issue is ‘particularly acute’ in the care sector.
But does the ruling do anything to clarify this area of key concern within the care sector; something which our clients and industry contacts tell us is one of their main worries? As the EAT put it, there is “desire for certainty in an area that carries penalties and potential criminal sanctions”.
The decision, including three joined appeals from different parties, sets out the factors which are relevant for determining whether a sleep in shift should be treated as “time work”.
The four potentially relevant factors, as set out by the EAT, to be taken into account when determining which rate of pay should apply, are
1. What is the purpose of the worker being present?
For example, is it a regulatory (e.g. for health and safety reasons) or contractual (LA contract) requirement for the worker to be present at all times? – i.e. they are working by their mere presence on site.
2. Is the worker restricted in what they can do by being on site and at the disposal of the employer?
What would the employer do if the employee left the site? Would this result in disciplinary action or could they slip out and return a short time later – i.e. the “fish and chip test”?
3. What are they responsible for when on shift and what might they be required to do?
Is the worker still subject to work-related responsibilities whilst asleep? Care workers are likely to have heavier personal responsibilities in relation to duties required during the night.
4. How quickly would they be needed if called upon?
In an urgent or emergency situation, is it the decision of the worker (using their professional judgement) to decide whether to intervene? Is the onus constantly on them throughout the sleep in shift or does the responsibility lie with a colleague who wakes the “sleeping” worker up to assist?
Because no single factor outweighs the others, the individual circumstances of each case will affect the relevance of the stages of the test and the weight a Tribunal will attach to it.
One of the cases heard concerned a care worker who had no specific tasks allocated to her during the sleep in shift but she was required to be present and may have been called upon to deal with incidents. The EAT held she was entitled to NMW for the entire shift as the employer would have been in breach of a legal obligation if she had not been present, and disciplinary action would have been instigated if she hadn’t remained on site.
The outcome is useful to care sector employers in the sense that it confirms there is no one determinative factor which will apply in all situations in judging whether NMW is payable throughout the shift.
Whilst this may allow some care providers to structure their sleep in shifts with consideration to the elements of the test, in reality the ruling does very little to clarify the current confused situation.
Until certainty can be achieved on this crucial issue for the care sector, many employers – already stretched by the difficult landscape of public sector care funding – will continue to worry about inadvertently falling foul of the NMW Regulations, or an HMRC inspection, both of which have significant cost implications for employers of all sizes.
In light of the financial landscape care sector operators face a choice: pay NMW for the duration of sleep-in shifts when they may not need to, or run the risk of Tribunal claims and HMRC action. Whichever route they choose, the costs can be extensive and, potentially, business-critical. Employers should audit their sleep-in pay practices and consider the financial impact of their actions, if they are in doubt about what to do.