Sleep-in workers not entitled to National Minimum Wage for sleep-in shifts

The Supreme Court has ruled that workers on sleep-in shifts are not entitled to receive National Minimum Wage (NMW) while they sleep. Workers are only entitled to NMW for the hours they are awake and working.

The Supreme Court has published a summary of their decision, together with the full judgment.

This is the final ruling and the workers in this case have no further right to appeal. However, there is now a call for a reform of the law on sleep-in shifts, particularly in the care sector.

What is a sleep-in worker?

Sleep-in workers usually work shifts where they are required to be at (or near) their workplace overnight. They are permitted to sleep during their shifts, however need to respond to emergencies. Typically sleep-in shifts are paid at a fixed rate (that usually falls below the NMW), with the worker being entitled to NMW for any time spent working.

NMW legislation on sleep-ins

Under NMW legislation, if a worker is required to be available at (or near) the workplace for the purposes of doing time work, this must be included in calculating time work for NMW purposes.

However, the exceptions to this rule are where the worker is (1) permitted to sleep during the shift, and/or (2) at home.

Facts of the original claim

Two care workers brought tribunal claims, which were joined as they shared similar facts:

• Both workers carried out sleep-in shifts for their employers;
• During the shift, they were permitted to sleep at (or near) their workplace, but were required to respond to emergencies or calls;
• They had to be present and ‘keep a listening ear out’, in case of an emergency;
• Received a fixed allowances for the sleep-in shifts that fell below the NMW;
• If they were called upon, they would receive NMW for the time spent responding to the call; and
• Both were called infrequently during the shifts.

The workers’ argued that they were working or available to work during their sleep-in shifts, and should therefore be paid NMW for the entirety of the shift, which included time spent sleeping.

The Supreme Court’s decision

It was held that workers are not entitled to be paid NMW during periods spent asleep. The reasoning included:

• A worker is not working (doing time work for the NMW purposes) if they are asleep;
• Hours must be provided to the worker as time to sleep, with the only requirement of the worker being to respond to emergency calls;
• Hours permitted to sleep do not form part of the NMW calculation, unless woken for work reasons;
• The only part of the shift that counts towards NMW is the time spent responding to emergency calls;
• NMW is only payable for hours the worker spends awake for the purpose of actively working; and
• It was not relevant that one worker had to keep a “listening ear” while asleep, which was held to not be enough to amount to time work.

As a result of the ruling, regardless of how many times a worker is called during a shift, the whole shift will not be included for NMW purposes, only the time spent actually working.

This type of case remains fact sensitive and not all workers who sleep during their shifts will be classified as sleep-in workers.

Impact of the ruling

Much needed clarity has been provided in this area of law where Employment Tribunals have taken an inconsistent approach over the years as to whether the sleep-in exception applies for the purposes of calculating NMW.

The central issue to all sleep-in cases has been clarified – the sleep-in worker is only entitled to receive NMW for the time they are awake for the purposes of work.

The Supreme Court indicated that previous Employment Tribunal decisions about sleep-in worker pay were wrongly decided and should be overruled. Such cases will now need to be reviewed in light of this ruling.

Advice for employers

This is a positive decision for employers, particularly in the care sector, who may have been concerned about substantial back-pay claims from sleep-in workers being paid a flat rate. However, caution still needs to be exercised with sleep-in workers, particularly with the push to reform the law in this area.

Keep records

The best approach is to keep full records for sleep-in workers’ and their shifts, including:

• Length of the shift;
• How many calls responded to (or confirm none);
• Length of time spent carrying out work responding to a call;
• Why the worker was called and what activity they were required to do; and
• How much the worker was paid for the shift, and whether NMW was paid for the proportion of time spent working.

Beware of changing contracts

Some employers who were previously paying flat rates to their sleep-in workers may have started to pay their workers an hourly rate in for the entire sleep-in shifts to ensure they receive NMW. This would likely have been the result of the original Employment Tribunal decision in 2017.

Now the decision has been reversed, if employers wish revert workers who are receiving an hourly rate to a flat rate, ensure that the correct procedure is followed to change the terms of the workers contracts. If a fundamental change is made to a worker’s pay, this may lead to costly Employment Tribunal proceedings for breach of contract and constructive dismissal.

COVID-19

One final consideration is that the Supreme Court heard this case before the COVID-19 pandemic. Since the pandemic, many home-working arrangements have been put into place, so all employers need to be conscious of this and any potential reforms and guidance.

If you have any queries in relation to this please do not hesitate to contact one of our experienced Employment Lawyers on 01202 525333 or employment@ellisjones.co.uk for further advice.