The Court of Appeal outcome on sleep-ins has decided in favour of Mencap that it is only time spent awake and working which is counted as working time during a sleep in. This reverses £400m minimum wage back-pay bill to care providers.
Mencap, as well as the intervening parties including Care England have today, 13th July, achieved a landmark ruling at the Court of Appeal, reversing the decision on sleep-in shift back-pay. Represented by Anthony Collins Solicitors, the successful Care England intervention means the £400m allegedly owed to care workers who had been deemed to be underpaid for overnight shifts is no longer considered to be due under current legislation – a decision that could prove historic for a sector already at tipping point.
Relinquishing providers from the responsibility of paying the substantial arrears – a motion that would have caused over two-thirds to enter bankruptcy – will safeguard the care of 1.2 million vulnerable people in the UK.
Care England said, 'The successful Appeal, in which Care England was an intervener, finally gives a clear steer with respect to historic liabilities for sleep-in shifts. The Court decided that sleep-ins fall into the exception as being ‘only available for work’ according to Regulation 32 and as such the National Minimum Wage (NMW) would only be payable when the person was awake and working and not while asleep.
'This has always been our understanding and after years of uncertainty brought about by conflicting employment tribunal decisions and confusing Government guidance we can at last be confident providers have the correct framework within which to make decisions on remuneration of sleep-in shifts provided there is no Supreme Court Appeal.
'The Government must now act speedily to give direction to ensure the original regulations are now relied upon as the basis for HMRC and employers to act. The status of the national Social Care Compliance Scheme (SCCS) and the obligations of providers registered within it must be clarified as soon as possible.'
Commenting on the ruling, Matthew Wort, Partner at Anthony Collins Solicitors, said, 'The magnitude of this ruling should not be underestimated, particularly as the care sector is already forecast to face a £2bn funding gap by 2020.
'Challenging the original findings of Mencap vs Tomlinson-Blake EAT, our argument was clear: under the current National Minimum Wage rules those undertaking sleep-in shifts should not be considered as working whilst asleep.'
Care England intervened in the 2015 Mencap vs Tomlinson-Blake EAT case that found care providers such as the Royal Mencap Society liable to remunerate employees at the NMW for each hour of sleep-in-shifts completed, with back payments to cover the last six years. A recent sector survey indicated, however, that on average, only 1% of time in sleep-in-shifts is spent actually working.
Previous court decisions were a shift from the standard practice where workers receive a flat rate per sleep-in shift, with minimum wage awarded at any point in the night spent awake working.
The successful case put forward by Mencap and Care England relied on looking at the Low Pay Commission recommendations when the legislation was introduced calling for the initial rules on remuneration to be honoured and the care sector spared potential bankruptcy.
Matthew Wort added, 'A lack of clarity from Parliament, mixed with poor advice and an inconsistent approach from HMRC, has meant that this situation has spiralled out of control, putting the care sector in jeopardy.
'We have always taken the view that it was never the intention of Parliament that all hours of a sleep-in should count for National Minimum Wage purposes – we made these submissions to the Government in 2014 as part of the Consultation on new National Minimum Wage Regulations and it is disappointing they didn’t act to clarify the situation then.
'Whilst the outcome is crucial in creating some stability in the short-term, there is work to be done at local and central government level. In order to deliver the best care, the UK system must balance the needs of both providers and workers, rewarding staff fairly for the work they do.
'Now, Government must update their guidance on how workers are to be paid for sleep-ins, while ensuring adequate funding is made available to safeguard the future of the sector and the people it cares for.'
This decision will result in further questions around the Government’s Social Care Compliance Scheme (SCCS) – a programme rolled out following the initial court decision, which asked care providers to calculate the total amount owed to both existing and previous staff in the form of sleep-in back-pay.
Derek Lewis, Chair of Royal Mencap Society also commented on the ruling, 'The Court of Appeal has today handed down its judgment in two cases, one of which involves Royal Mencap. These are representative of many similar cases in the care sector. The Court’s decision has removed the uncertainty about how the law on the National Living Wage applies to sleep-ins. The prospect of having to make large unfunded back payments had threatened to bankrupt many providers, jeopardising the care of vulnerable people and the employment of their carers.
'Many hardworking care workers were given false expectations of an entitlement to back pay and they must be feeling very disappointed. We did not want to bring this case. We had to do so because of the mayhem throughout the sector that would have been caused by previous court decisions and Government enforcement action, including serious damage to Mencap’s work in supporting people with learning disabilities.
'What is clear though, is that dedicated care workers deserve a better deal. They work hard and support some of the most vulnerable people in society, but many are among the lowest paid. We and many other providers have been paying for sleep-ins at a higher rate for over a year now, and we intend to continue despite the Court’s decision. We now call on Government to fulfil its responsibilities by legislating so that all carers are entitled to this, and their employers are funded accordingly. We also call on Government to ensure that the social care sector and, in particular, the specialised support that is required for people with a learning disability is properly funded and its workers are paid what they deserve in the future.'