PAYROLL INSIGHT
Sleep-ins and the NMW Emma Burrows, partner at Trowers & Hamlin LLP, sets out latest developments and their impact
S leep-ins have been a topic of due to escalating costs in the sector and a new approach by HM Revenue & Customs (HMRC) to enforce payment of the national minimum wage (NMW) for sleep-ins. These are causing a potential crisis for care providers. An independent survey, which was recently carried out by the Voluntary Disability Organisations Disability Group (VODG), Agenda Consulting and Trowers & Hamlins LLP, provides the most comprehensive overview yet of the likely effect on the sector of the application of the NMW to sleep-ins. Following case law, a worker who is required to be on the premises and who would be disciplined if they left the workplace will be deemed to be working for the whole of their overnight shift even if they are sleeping during some, or all, of this time. This means that they are entitled to be paid the NMW (which can be the national living wage) for every hour that they are working. As a result, some care providers are unable to meet the costs of paying the NMW for sleep-ins and are living with the risks of not doing so. Some 66% of those who responded to the survey do not pay the NMW for sleep-ins, and only 32% of these plan to start paying sleep-ins at the NMW. The risks are that both workers and HMRC may have claims for back pay against those care providers that do not controversy for some time but the issue has become more pressing
pay. Many care providers are now having to dig deep to try and finance payment of substantial arrears as a result. In the survey, 84% of those audited specifically in relation to sleep-ins had audits which took place in 2016 or 2017, with 35% receiving a notice of underpayment. A quarter of the 35% were only asked to make a single year of back payments, but another quarter were asked to cover 5.3 years on average. The big issue is who will pay for the additional costs. Commissioners have only agreed to fund 14% of services at NMW rates according to the survey results. The survey also shows that for 67% of services, commissioners have either refused to pay or refused to even engage with the issue. The survey asked those providers who do not pay the NMW for sleep-ins what the impact will be if they must pay the NMW for these periods and they do not receive extra funding from commissioners. The results show that 25% of the services currently being provided would have to be handed back to commissioners. There is the impact on the care providers themselves, too. For those not paying NMW rates 61% would need to make redundancies if they met the additional expense of paying the NMW. Based on the survey sample this could amount to as many as 23,144 redundancies. The Employment Appeal Tribunal (EAT) recently considered three conjoined appeals concerning the question of how time spent asleep during a ‘sleep-in’ shift should be treated under the NMW regulations
(NMWR) in Focus Care Agency Ltd v Roberts, Frudd and another v The Partington Group Ltd, and Royal Mencap Society v Tomlinson-Blake. The central issue was whether employees who sleep-in in order to carry out duties if required, engage in ‘time work’ for the full duration of the sleep- in shift or whether they are working for NMW payment purposes only when they are awake to carry out any relevant duties. The EAT confirmed that a ‘multi-factorial evaluation’ should be applied to establish whether the individual is working. The factors will include a consideration of the work being carried out, whether there is a contractual or statutory requirement to be present, and the immediacy of the requirement to respond to an unusual event. ● pay the NMW/NLW and take the pain ● restructure the business to ensure that existing workers aren’t doing sleep-ins ● in certain circumstances, argue that staff are on-call rather than sleeping in, so that the time is unmeasured and can be covered by a workplace agreement, though this is potentially problematic. Since the EAT’s decision in Shannon v Rampersad (t/a Clifton House Residential Home) it seems that there will be times when on-call time will only be paid when the individual is awake for the purposes of working. Here, a night care assistant in a residential care home was not ‘working’ simply by being ‘on-call’ in his flat on the premises (where he was not required to be all the time). The EAT held that only those hours when he was “awake for the purpose of working” counted towards the NMW. This case has been appealed to the Court of Appeal. n What measures can employers implement to reduce their risk?
...care providers are now having to dig deep to try and finance payment of substantial arrears...
| Professional in Payroll, Pensions and Reward | July/August 2017 | Issue 32 18
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