Causing controversy whilst sleeping

22 February 2018

Hanna Sandford, Consultant at Aspire Business Partnership, blogs on the issue of sleep-in shifts - encompassing contradicting regulations, guidance and case law and the potential financial damage the cost of repaying arrears to workers could have on the social care industry.


Recent case law and media exposure has led to sleep-in shifts being highlighted as a major cause of National Minimum Wage (NMW)/National Living Wage (NLW) breaches in the social care sector. Historically, it was common practice in the social care industry for social care workers to be paid a flat-rate allowance, typically £25 - £35, as opposed to the hourly legal minimum rate, for a sleep-in shift.  A sleep-in shift will occur where a worker is required to sleep at a care service user’s home to look after them during the night. Typically, a social care worker would be paid a flat-rate for the time spent sleeping, which often would not equate to the NMW/NLW.

The Regulations

The NMW Regulations 2015, Part 5, Chapter 3, Regulation 32 (1) and (2), Working Time for the Purposes of the NMW states that; 

(1) Time work includes hours when a worker is available, and required to be available, at or near a place of work for the purposes of working unless the worker is at home.

(2) In paragraph (1), hours when a worker is “available” only includes hours when the worker is awake for the purposes of working, even if a worker by arrangement sleeps at or near a place of work and the employer provides suitable facilities for sleeping.

The 2015 Regulations permitted the arrangement that where a worker sleeps at or near a place of work (i.e. a social care worker carrying out a sleep-in shift in a service users home), the time spent carrying out the work is not “time work” for the purposes of the NMW regulations and so, the worker, in accordance with the legislation, was not entitled to the NMW/NLW for this time.

The Case Law and Guidance

The guidance published by the Business, Energy and Industrial Strategy (“BEIS”) in 2015 also supported the flat-rate custom which has been common practice in most social care organisations for some years. The guidance on calculating the NMW published by BEIS contained the following paragraph; -

Time when a worker can sleep and is not working is not time for which you have to pay them the minimum wage. However, if they have to get up and work, the time spent awake when they are getting ready for work and working is time for which the minimum wage is due

Whilst the law recognises the difference between sleep-in shifts and waking shifts, the Tribunals have now handed down judgements which give the opposite view. It was determined in two tribunal cases, Esparon v Slavikovska and Whittlestone v BJP Home Support Ltd that the individual circumstances of why an employee is required to sleep on the work premises need to be considered to establish if the periods when a worker is asleep count towards time work for the purposes of calculating NMW/NLW.

The Government acknowledged that the guidance on NMW/NLW was misleading prior to February 2015 and so, following the two cases, the guidance was updated (Section 3) to state that;

A worker, who is going to be working, even though they are asleep, is entitled to the minimum wage for the entire time they are at work”.

The rulings in these cases changed things drastically by causing a striking contradiction to the legislation and starting the beginning of a protracted period of uncertainty, which has brought us to our current position, the question at the heart of the matter still very much remained…

Are workers who are required to do sleep-in shifts in order to carry out their duties if required, engaging in “time work” for the whole duration of the sleep-in shift or are they only working for the purposes of NMW/NLW for the time in which they are required to wake up and carry out a duty?

Three further cases, Mencap v Tomlinson-Blake [2017], Focus Care Agency Ltd v Mr Brian Roberts [2017] and Frudd v Partington [2017], which were heard in conjunction at the Employment Appeal Tribunal (“EAT”) proved to be further exceptions to the regulations. In these three cases, commonly referred to as “the Mencap case”, it was found that the workers were entitled to NMW/NLW for the entirety of their sleep-in shifts. The Royal Mencap Society has appealed the decision and the appeal is due to be heard in March 2018.

Following the Mencap judgement, social care providers across the country entered in to a dispute with HMRC over the demand for up to 6 years back-pay and penalties. Mencap reported their concern over the potential cost of the back-pay, and the financial strain this would put on the social care industry.

The Government recognised that this could potentially destabilise the industry and so, following the Mencap case, in July 2017 the Secretary of State issued the following direction, (contained within the NMW enforcement guidance); -

3.7.6. A Notice of Underpayment is not to impose a financial penalty where

· part of the underpayment is attributable to the treatment of, or arrangements concerning, time when the worker was working and was, by arrangement, permitted to sleep; and

· that part of the underpayment occurred in a pay reference period that ended before 26 July 2017.

Should we prepare to say “good-night” to the care industry?

Whilst the penalty waiver on sleep-in shifts may save the care industry a penny or two, it’s simply not enough to lessen the strain of up to 6 years back pay owed to workers who have completed sleep-in shifts. It seems extremely unjust that care providers could owe up to six years’ worth of arrears to workers for sleep-in shift pay when the Government guidance, which permitted social care employers to pay the sleep-in allowance, only changed in 2015 and the legislation still permits that a worker is only consider “available” for work when they are awake.  

The Social Care Compliance Scheme (“SCCS”) was introduced to aid employers in repaying the arrears. However, although it gives employers a limited time-frame to identify and correct any underpayment and avoid any penalties, the arrears remain due and this is likely to lead to a number of employers being able to meet their debts and so, potentially face bankruptcy.

The mechanics of the SCCS

  • The scheme was introduced on 1st November 2017 following an NMW penalty waiver which the government announced between 26th July 2017 and 1st November 2017
  • Every Social Care company that has been subject to a complaint about NMW breaches will be contacted by HMRC to join the SCCS scheme. However, employers will be able to opt into into the SCCS where applicable
  • Employers who are in the scheme must conduct a self-review within 12 months to identify any cases where NMW has been breached. The employer must then make repayment of the liability owed to the worker within 3 months of the end of the self-correction period. The process for carrying out the self-review is as follows;Review the amount you’ve paid your workersSubmit the declaration form, usually within 12 months of receiving it, or by 31st December 2018 if sooner Review the amount you’ve paid your workers
  • Review the amount you’ve paid your workers
  • Submit the declaration form, usually within 12 months of receiving it, or by 31st December 2018 if sooner
  • Make repayments of any arrears within 3 months of submitting your declaration or by 31 March 2019, whichever is sooner
  • Make payments of any other NMW/NLW underpayments prior to submitting your declaration form
  • Pay any additional tax and NICs that result from any underpayments
  • Make sure you pay the correct rate for each sleep-in shift from the point you discover you have been underpaying workers
  • Keep records of your decisions and calculations
  • If the liability is repaid within the given timescales, then no penalties will be charged and the employer will avoid being “named and shamed”
  • Regardless of when an employer enters into the SCCS scheme, the absolute deadline for registering with the SCCS scheme is 31st December 2018 and the deadline for repaying arrears to workers is 31st March 2019

The following people may be eligible to join the scheme;

  • An employer in the social care sector who provides sleep-in shifts
  • Someone who funds their own care
  • Someone who receives money to fund their own care (such as through direct payment, social care personal budget or personal health budget)

Will the Government help cover the cost of the arrears?

The Government is limited by strict State Aid rules which prevent them from using state money to support the debts of individual businesses.

Aspire Comment

Whilst the Government has acknowledged the difficulty that recent legal case outcomes and changing the guidance has caused, many have cited this as the “sleep-in crisis” – a problem which the Government caused and only they can fix.

Understandably employers are frustrated that they can’t rely upon guidance published by the Government and when they do rely upon the guidance and it’s subsequently found to be wrong, they’re then faced with a combined bill of £400m – a cost which many simply cannot afford. The penalty amnesty will save care companies millions, but it certainly won’t be the life-raft the care industry needs to survive.

And so, with recent case law and new guidance clarifying the legislation it’s safe to assume that the troubles for the social care industry haven’t yet been put to bed.

Read some our recent news items on sleep-in shifts, the case law and SCCS.

Are you entitled to NMW if you spend your “working” time asleep?

Changes to the NMW guidance could see charities become insolvent

A notice of underpayment will not impose a penalty if “sleeping time” is concerned

Sleep in shift compliance scheme introduced in the social care sector

New NMW enforcement approach for sleep in shifts

Please also click here to see our campaign where you can register your interest to receive further information from Aspire.

If you would like to discuss anything in relation to the SCCS with a member of our team, please get in touch on 0121 445 6178.