The Mencap decision and its implications
The Court of Appeal's decision in Royal Mencap Society v Tomlinson-Blake and Shannon v Rampersad (t/a Clifton House Residential Home) (the Mencap case) comes as a great relief to care providers who have been faced with an ever-increasing pressure on budgets. However, it also raises a number of challenges.
The Court held that employees are not entitled to the national minimum wage (NMW) for the full duration of their sleep-in shift because the work they are carrying out is "time work", and they are therefore only entitled to the NMW when they are awake and carrying out duties.
The Court looked first at the National Minimum Wage Regulations and concluded that their effect is that a worker who is required to be available for the purpose of working, at or near his or her place of work, is entitled to have this time counted as time work for NMW purposes. The two exceptions to this are where the worker is at home, or where the arrangement is that they will sleep (and be given facilities for doing so). In the latter scenario only the hours where they are, and are required to be, "awake for the purpose of working" will qualify for the NMW.
The Court also took into account the recommendations of the Low Pay Commission reports that those carrying out sleep-ins should be entitled to the NMW for all the times when they are awake and required to be available for work.
The outcome of the appeals
In Mencap the claimant slept by arrangement at her place of work whilst on her sleep-in shift and was expected to deal with emergencies. She was treated as being available for those hours, rather than actually working. The sleep-in exception applied, with the result that only those hours during which she was required to be awake for the purpose of working counted for NMW purposes.
Meanwhile, in Shannon a night care assistant was again only available for work and not actually working.
Impact on the care sector
What do providers who are currently paying the NMW for sleep-ins do? If they stop, they will have to manage repercussions from disgruntled staff.
How about HMRC's Social Care Compliance Scheme which is now, effectively, redundant? HMRC will be issuing guidance.
And what about providers who have made backpay payments to staff to cover historic NMW shortfall for sleep-ins? Can these be recovered? Provided the payments have not been made under COT3s or settlement agreements there may be scope.
Finally, there's the issue of commissioners to consider and whether they will continue to contribute to the cost of contracts. We already have anecdotal evidence that some commissioners are reconsidering their decisions to pay top ups to cover the NMW.