Sleep-ins and the national minimum wage

In July, the Court of Appeal handed down its decision in the joined cases of Royal Mencap Society v Tomlinson-Blake and Shannon v Rampersad [2018] EWCA civ 1641, which have become jointly known in the media as the ‘Mencap’ case. 

The court reversed the Employment Appeal Tribunal decisions in these cases, and a considerable body of case law, by ruling that ‘sleep-in workers’ are only entitled to the national minimum wage (NMW) while they are ‘awake for the purposes of working’.

The decision was met by a palpable collective sigh of relief by employers, particularly in the care sector, which it had been estimated were facing NMW back-pay liabilities of £400m. 

For workers who undertake sleep-in duties, their hopes of cash windfalls took a significant but not necessarily decisive blow. Unison, which is supporting the claimant in the Mencap case, Ms Tomlinson-Blake, has lodged an application to the Supreme Court for permission to appeal against the appeal court decision. It is expected that the Supreme Court will grant permission and, if so, a hearing is likely to be listed in the latter part of 2019. 

If the Supreme Court grants the permission to appeal there can be no guarantee as to the outcome, especially given Unison’s landmark success challenging the unlawful implementation of tribunal fees in the Supreme Court in 2017. 

In reaching its decision, the appeal court found it necessary to distinguish a raft of other cases on debatable grounds. The first of which was an earlier court decision in British Nursing Association (BNA) v Inland Revenue [2003] ICR 19. In that case, the court held that nurses (who were required to answer calls through the night but could sleep between calls) were undertaking work for the purposes of the NMW throughout their shifts and not just when they were answering calls. This meant that the exemption from the NMW, where workers who were available to work but sleeping, was not applicable.

Underhill LJ distinguished the BNA case by drawing a distinction between ‘actual work’ and times when the worker was ‘available to work’. He concluded that if a worker was expected to sleep (which the nurses in the BNA case were not) then while they were asleep they were ‘available for work’ rather than ‘actually working’. He opined that it would not be a natural use of language, in a context which distinguishes between (actually) working and being available for work (that is, the NMW regulations), to describe some as ‘working’ when they are positively expected to be asleep throughout all or most of the relevant period. 

Nightwatchman duties

While of only persuasive authority, Underhill LJ also found it necessary to distinguish the Court of Session case of Scottbridge Construction Ltd v Wright [2003] IRLR 21. The decision in Scottbridge found that a nightwatchman was entitled to the NMW throughout his shift. Underhill LJ interestingly sought to distinguish this case on the grounds that the roles of a sleep-in worker and a nightwatchman are different. The factors that Underhill LJ identified to justify this decision were that the nightwatchman was not given a proper bed for sleeping, that he had significant duties at the start and the end of a shift, and was only allowed to sleep for five hours of the shift. There may well be many workers in the care sector who could see no difference between their conditions and those ascribed to the nightwatchman. 

The subtleties of these distinctions do not necessarily mean the judgment was wrongly formulated (although they do significantly increase the risk of challenge). The simplicity of LJ Underhill’s reasoning is compelling (although the factual complexities of applying it will remain) and there is good cause to argue that the Court of Appeal’s judgment more accurately reflects the true intentions of parliament when it enacted the NMW legislation. The then government sought to implement the recommendations of the first low pay commission report, which concluded that: ‘For hours when workers are paid to sleep on the work premises, workers and employers should agree their allowance…But workers should be entitled to the NMW for all times when they are awake and required to be available for work.’ 

There are also considerable public policy reasons for the Supreme Court to uphold the appeal court’s decision. With an ageing population putting increasing strain on health and social care provision, combined with the best part of a decade of austerity, the public sector is poorly placed to handle such significant back-pay liabilities without it impacting on services. 

In the wake of the EAT’s decision in April 2017, the government changed its guidance to require all employers to pay the NMW for all sleep-in shifts. As a consequence, many social care providers sought new arrangements with their commissioning local authorities to ensure compliance with the NMW. Many of those same employers will now be concerned that local authorities may start to renege on those deals if/when that guidance changes. 

Equally, many employers joined the government’s Social Care Compliance Scheme (SCCS). The purpose of the SCCS was to assist employers in calculating the cost of back-pay liabilities in return for protection against enforcement fines. Following the Court of Appeal ruling, the government has decided to continue with the SCCS, enabling employers to complete the self-assessments based on revised guidance to be issued by the government.

It is, however, difficult to see what purpose the SCCS now serves, particularly as all participants will need (under the current rules) to have made a declaration of their back-pay liabilities by no later than

31 December 2018, which will fall before any judgment of the Supreme Court. 

Perhaps the only thing that is clear is that employers and workers now face a further period of uncertainty while we await a final determination on this near two-decade old saga.

Jonathan Pearce is senior associate at Bates Wells Braithwaite