Mencap sleep-in pay decision: Supreme Court confirms National Minimum Wage is only payable for time awake for the purpose of working

Reassuring news for employers now that the Supreme Court has handed down the long-awaited decision in the cases of Royal Mencap Society (Respondent) v Tomlinson-Blake (Appellant), and Shannon (Appellant) v Rampersad and another (T/A Clifton House Residential Home) (Respondents).

To the relief of care provider employers, it closes a long chapter of uncertainty over whether care staff working overnight sleep-in shifts should receive National Minimum Wage (NMW) rates of pay for every hour spent asleep, questioning if time spent sleeping amounts to working time.

What hours will be paid at NMW?

In dismissing the appeals from the employees, The Supreme Court decision sets out that only hours spent awake for the purpose of working should be paid at NMW rates. It ruled that it was not the intention of Parliament in the applicable legislation for every hour of a night shift spent sleeping to be paid at NMW rate, where the worker was expected to sleep unless disturbed.

Accordingly, fixed allowances amounting to less than the NMW for every hour of the sleep-in shift are permissible.

The court further set out that no arrears of back pay are payable as a result in respect of historic  sleep-in shifts.

Care providers have been waiting more than 12 months since the Supreme Court hearing took place in February 2020 to learn of the outcome of years of litigation, and following the Court of Appeal decision in July 2018 – our previous article provides background.

How has this affected employers?

Litigation, in numerous cases, over the interpretation of this issue, began more than 20 years ago, and the Mencap case employment tribunal ruling dates back to 2016.

Over the last five years, as the case has advanced through the court system, providers faced great financial risk in respect of both employment tribunal litigation, and HMRC investigations and audits – including the Social Care Compliance Scheme in 2018. These led to genuine concerns over the viability of their businesses and potential insolvency if NMW was to be payable for each hour of the sleep-in shift.

Whilst many providers have introduced pay systems to address sleep-in pay rates – either by introducing NMW rates for all hours of work (including sleeping) or eradicating sleep in shifts-in favour of waking nights – with the risk of HMRC action for up to six years’ back pay, providers have not been able to move on from the risk of significant financial ramifications if the Supreme Court had decided differently.

The decision will raise many questions regarding the aggressive approach previously adopted by HMRC in investigating alleged NMW breaches for sleep in shifts, and how that is to be addressed.

Next steps for care sector employers can be found here

If this affects your business and you would like further advice, please contact Stephenie Malone at [email protected] or on 07896 462 779.