- The sleep-in crisis: the Court of Appeal overturns judgment for £400 million back pay
The sleep-in crisis: the Court of Appeal overturns judgment for £400 million back pay
The sleep-in crisis: the Court of Appeal overturns judgment for £400 million back pay19 Jul 2018
In February we reported on the high-profile employment tribunal decision that determined that care workers must receive the national minimum wage, as opposed to a flat-rate fee, for ‘sleep-in shifts’ (overnight shifts during which they are permitted to sleep). This sent shockwaves across the care industry and threatened to bankrupt many smaller businesses who faced having to fork out back pay of up to six years for failure to pay their employees the national minimum wage during these types of shifts. Many care providers felt wronged by this prospect on the basis that they had not knowingly underpaid their employees.
The decision was appealed in the Court of Appeal by the Royal Mencap Society due to the financial impact of the requirement to back pay its care workers. They argued that care workers should not be regarded as doing ‘actual work’ during sleep-in shifts, but rather that they should be deemed as being ‘available for work’, which would not entitle them to the national minimum wage.
On the 13th July 2018, the Court of Appeal agreed with the Royal Mencap Society and overturned the original decision, ruling that the only time care workers would need to be paid national minimum wage was when they were required to be awake for the purposes of working.
However, care providers should be warned that Unison (the trade union representing care workers) is considering an appeal to the Supreme Court, so this decision could well be overturned again.
What is the impact on care home providers?
Care providers will no longer have to make a six-year back payment for failure to pay their care workers the national minimum wage during sleep-in shifts. The impact of the Government’s Social Care Compliance Scheme, which was implemented following the wake of the Employment Tribunals’ decision, is now being questioned and so it remains to be seen whether the Government will now cancel the scheme.
Care providers who, since February, had started paying their care workers the national minimum wage during sleep-in shifts are no longer required to do this. The Royal Mencap Society, however, has said that it will continue to pay its care workers the national minimum wage during sleep-in shifts, despite the Court of Appeal’s decision, and have called upon the Government to legislate so that all care workers are entitled to this and that care providers are funded accordingly.
This decision is likely to disgruntle many care workers who had been given a false expectation of an entitlement to back pay and to the national minimum wage during sleep-in shifts, so consideration should be given as to how this decision is communicated to affected care workers.
Any care providers who had started paying their care workers the national minimum wage for sleep-in shifts should not look to recoup this money back from its care workers. However, going forward many businesses may want to consider reverting back to paying their care workers a flat-rate fee for sleep-in shifts.
Any change to care workers pay during sleep-in shifts amounts to a variation in their terms of employment, and so consideration should be given as to how this is implemented to avoid there being a breach of contract. One of the ways to avoid a breach of contract is to consult with affected care workers to obtain their consent to the change in their pay during sleep-in shifts prior to implementing the change. In order to obtain the workers consent, it is important to consult with the workers to explain why the change is necessary. For example, if care providers are at serious financial risk, care workers could be informed of this. Consideration should also be given as to whether it is possible to pay the care workers a higher flat-rate fee than they had previously received for sleep-in shifts. If it is, this may act as an incentive for consent.
If you would like advice on the payment of care workers, please contact us.