Workers are entitled to the NMW (or national living wage for over 25s) for every hour they work, which is assessed by looking at their average hourly pay across the pay reference period. However, it is not always easy to determine how many hours a worker is actually working, particularly in relation to sleep-in shifts. Importantly, if a worker is ‘working’ simply by being present, the whole of their shift will be taken into account when considering whether they have received the NMW. If the worker is not ‘working’ merely by being present and is provided with sleeping arrangements (or is ‘at home’), only the time spent performing tasks will be counted.
In Focus Care Agency Ltd v Roberts, the EAT identified relevant factors:
- The employer's particular purpose in engaging the worker – is the employer subject to a regulatory or contractual requirement to have someone present?
- The extent to which the worker's activities are restricted by the requirement to be present – will the worker be disciplined if they slip away to do something else?
- The worker's degree of responsibility – does the worker merely have to call the emergency services if required or do they have more responsibility (eg a night sleeper in a care home for the disabled)?
- The immediacy of the requirement to provide services – does the worker have immediate responsibility for intervening or are they only woken when needed by another worker?
This list is not exhaustive, no single factor is determinative and the weight attributed to each factor will vary from case to case.
HMRC suspended enforcement action against defaulting care providers until the end of October, promising a new scheme and guidelines. It also waived financial penalties for sleep-in shift pay pre-dating 26 July 2017 over concerns about the combined impact that financial penalties and arrears of wages could have on the stability and long-term viability of providers.
On 1 November, the Department for Business, Energy and Industrial Strategy published its interim enforcement regime, which allows employers at risk of underpaying sleep-in shifts to opt in to a Social Care Compliance Scheme, with 12 months to self-review and a further three months to repay any arrears (by 31 March 2019 at the latest). Employers not opting in will not receive such concessions. Employers should seek legal advice as to whether opting in is right for them.
Steps employers can take to reduce the risk of falling foul of the NMW rules include:
- Defining workers' duties carefully – if possible, limit the number of workers with primary responsibility for intervening and restrict employee activities. Ensure any distinction is clear in workers' contracts and that it is followed in practice.
- Focusing on average pay – if workers are paid more than the NMW for day shifts, it may be possible to retain a lower night shift allowance provided average pay meets the NMW.
- Considering whether a daily average agreement is appropriate – where a worker carries out ‘unmeasured work’, the employer and the worker can use a daily average agreement to specify the hours that count for NMW purposes. Such agreements must be signed by both parties before the relevant pay reference period, and the agreed hours must be a realistic estimate of the time needed to complete the work. This approach is unlikely to be effective for many care workers, who will be salaried or will be ‘working’ simply by being present and will therefore be carrying out ‘time work’.
- Using the accommodation allowance – £6.40 per day can count towards a worker's pay for NMW purposes where accommodation is provided for the whole day.
Madeleine Mould is a solicitor and Rebecca Ireland is a partner in the employment law team at Blake Morgan