What the Mencap sleep-in payments judgment means for the sector

By Belinda Schwehr, chief executive CASCAIDr

Mencap has won, and sleep-in staff do not automatically get paid the National Minimum Wage (NMW) for every hour of a night shift.

The Court of Appeal’s judgment looks at whether employees who are allowed to ‘sleep in’ in order to carry out caring duties, if those duties turn out to be required, are all to be treated as on time work under the NMW regulations – and have to be paid NMW just because they are positively required to be there for the purposes of working; or, whether they are covered by the rules in regulation 32, about not getting the NMW for sleeping time, if they are required to be at or near a place of work, merely to be available for work.

Merely being required to be present somewhere does not make one automatically required to be somewhere for the purposes of working. It can do, but it doesn’t have to.

Our instincts tell us that some people who sleep on a job are there for the purposes of working, by reference to the nature of what they are doing, probably. A lone night watchman, for instance, watches out and listens, even if asleep. A caretaker of premises who does not have to live in, but who can sleep on the job, might not be instinctively thought of as working all night long, on the other hand.

At which end of the spectrum above, are care workers who sleep in, in order to be there if something happens, and care is needed? 

What the law says

Although the concept of work, and the determination of when a worker is working for the purposes of employment law, is central to approaching the determination of whether the obligation has been complied with, there is no definition of what constitutes work.

The hours of work worked or treated as worked for NMW purposes are determined by reference to the true nature of the contract, whatever the wording used: there are four types – salaried work, time work, output work and unmeasured work – and a chapter in the regulations dealing with each type.

If the work is of type A, it cannot be work of the other three types, and so on until one gets to the last category of work, which is unmeasured work. If the regulations compelled the decision that all work done at night, when a person had to be somewhere ‘in case’, was salaried or time work then it could not ever be seen as unmeasured work. Yet unmeasured work is work that exists, and in fact typifies the live-in care model of work from an introductory agency.

The argument in the Mencap case

Mencap argued that employees ‘sleeping in’ are only entitled to be paid when they are awake for the purposes of working and that was the true intention underlying the legislation implementing the National Minimum Wage, the idea being to give low paid workers some protection via a NMW but not to pay them for what nobody at the time would have expected them to be paid for – being asleep, to put it bluntly!

The claimant in this case was on a contract everyone accepted as a salaried time contract for the day shift; and the question was, could the night time shift work that she was expected to do, feasibly be seen to be different, eg as time work or as unmeasured work?

She was required to carry out a sleep-in shift between 10pm and 7am for which she received a flat rate allowance of £22.35 plus an hour’s pay of £6.70.

There were no specific tasks allocated to the claimant during a sleep-in. She was allowed to sleep and further there was an expectation that she would have had a sufficiently good night’s sleep to enable her to perform her duties satisfactorily the following day. However, she was obliged to remain at the premises in question throughout the sleep-in.

The claimant described her responsibility, during the sleep-in shift, to keep a ‘listening ear’ out during the night in case her support were needed. The tribunal found that the only task that she was required to do during sleep-ins was to be there and to deal with tasks that required her intervention, as and when. It also referred to her keeping a ‘listening ear’ whilst in bed, “whether asleep or not”. In fact, there were relatively few occasions when the claimant had to perform any actual tasks during a sleep-in.

What the Court of Appeal ruled

The Court of Appeal has decided that one only gets NMW when sleeping in if one is required to be there for the doing of some specific task, not just being there ‘just in case’.

It will still – potentially – be a question of fact in a given case as to which side of the line it falls, if the employment contract allows for lack of clarity about the nature of the obligation at night, but the sector should be able to take care to avoid finding itself embroiled in this debate.

Live-in workers are in a different position, because there is an exception to the concept of being available for work in regulation 32 if you are at home.

Live in workers are either genuinely living in, as licensees or tenants, and when that is the case, they tend to be on what’s called a contract for unmeasured time, anyway, which does not distinguish between sleeping and waking nights for NMW purposes. In that sort of a scenario they are allowed to have a daily average agreement for the number of hours which are to be regarded as worked, and are paid NMW for that number of hours.

Likely consequences of the decision for the care sector

The judgment preserves the live-in model of care for the sector, which must be a tremendous relief. But mainstream shift work in supported living and care homes is a much larger body of work, and of potential impact for the sector.

People who sleep on a shift, without living in, were once and will now lawfully be allowed to be paid an allowance for night time work, plus NMW for any hours that they are awake, in light of this judgment, so agencies who employ such staff are not put at a disadvantage compared to agencies who merely introduce people for employment to direct payment and private clients for unmeasured time contracts.

In that sense, the two types of night work will be treated the same in practice, which makes sense.

Why staff are unlikely to lose out on minimum wage 

CASCAIDr’s view is that this judgment will not actually affect the current practice of paying NMW for all night shift work, necessitated by the fact that the NMW has had to be paid since Mencap first lost its case, because of the state of the market in adult social care more generally.

For workers who have been paid the NMW for every hour, since the original judgment in 2016, CASCAIDr thinks it is extremely unlikely that they will be expected to take a cut in salary now, just because one could contend that they don’t have to be paid NMW at night.

The state of the market, after years of commissioning practice to bully down the rates paid by councils and CCGs, and in light of European workers going home in disgust at the time settlement of Brexit rights to stay is taking to work out, means that workers will go to any provider who will pay them NMW for every hour. Agencies are already struggling to recruit in order to discharge contractual obligations to councils.

Since no council wants to go back to having to provide care through directly employing its own home care staff, now – and remembering that the duty is to provide, in order to meet need, if it is not in fact possible to purchase from providers – we think only the most delusional commissioners would seek to capitalise on the Mencap victory.

Paying new staff coming in on a different basis would be highly unattractive for decent employment relations.

Implications for providers

Mencap’s faith in appealing has done its job – ironically – for the sector – just by raising awareness of the issue and the conditions for night staff whilst avoiding a back pay feeding-fest by law firms, quite possibly.

Providers worried that they would have to pay money back to councils do not have to worry. The work done to date has been done under contracts that were properly varied to pay a fee that allowed for NMW to staff, whilst the law was to the effect that the NMW had to be paid. Any provider who signed a contract allowing for recoupment if Mencap won would have only its management to blame!

Providers may come under pressure from the most macho parts of commissioning to take cuts to the fees for the future, and must absolutely resist, if they are going to continue to pay the NMW to keep the staff turning up for work in the real world. They cannot decide to do this as a cartel as that would be criminal. But they can do it individually if they have any business sense and grasp of law, and just say No. LAs will have budgeted for it, after all.

Local authorities’ remedy for their own funding difficulties lies with putting up a stronger front and speaking truth to power (the Treasury and the Ministry of Housing Communities and Local Government) and the new Secretary of State in the Department of Health and Social Care, Matt Hancock – whilst he is hopefully still open to learning about the enormity of the problem facing social care.

Community care clients with commissioned packages of care will carry on with their current budgets, assuming that their providers were paid by the commissioners to be able to fund NMW over the last year or so.

Direct payment clients and the ambiguities in their budgets

Community care clients on direct payments are in an interesting position. They are unlikely to have had their budgets increased over the last two years, unless they were knowledgeable and assertive and well supported by advocates. They don’t need an increase now, in legal terms, but in market terms, in order to be able to keep staff, they may well do.

CASCAIDr’s message is that it is not open to councils to pay less than the market rate for the right level of PA, and therefore it may be necessary for direct payment holders to check out what the effect of this case really is in their own local market, and seek a review under section 27 of the Care Act based on a change of circumstances.

CASCAIDr has seen several people in dire straits in this regard. Their Care Act care plans (mandatory under section 25 of the Care Act) may have specified that hours at night were actually needed but many people living at home get their night-time hours met informally by relatives. There are people living alone with night-time needs whose care plans did not specify night-time hours at all, on an outcomes footing only, or more likely on a deliberately fudged basis so as to enable the person to have flexibility – or even more likely, to make the person make savings on what a commissioned package would have cost!

The actual budget for a person living alone with night-time needs might have been calculated on the negotiated – or imposed – footing that the person:

• Was going to employ a person directly – whereas in fact they might have had to go to an agency for more than one worker and for covering holidays etc from time to time;
• Was going to have a person sleep in in a spare room or genuinely live in (less likely since Brexit deterred European Economic Area nationals from coming here and using the live-in model for accommodation) – therefore avoiding NMW rates;
• Was going to have to pay more at night than during the day for anti-social hours – or actually less than the day rate, because the day rate and bank holidays allowed for were paid at more than the NMW per hour, but for the night time, a mere allowance of about half NMW was to be paid In either of these cases the NMW rules only require an average rate to be paid per hour, not the NMW for every hour worked. Now Mencap has won, comparing hourly rates to the whole picture for the shift doesn’t matter for NMW purposes, but it will do for market rate purposes.
• Was going to employ a worker (whether live in or not) on an unmeasured basis, with a daily average specified that complied with the Working Time Directive, without regard to whether they slept on the premises or not.

In some of these scenarios, the direct payment rate would likely not have been adequate to pay the NMW via an agency or an employer/employee relationship for any workers on an allowance footing during the period when Mencap were the losers.

The rate might have been enough for anyone on an unmeasured daily average footing, but it is impossible to be sure without carefully considering the legitimacy of the unmeasured contract anticipated average.

What the future holds

Either way, now Mencap has won, it is unlikely that employed PAs will be going to a tribunal for back pay, so most direct payment holders can sleep easier in their beds. But if cuts are imposed on the next review, they need to be alive to the point that it is the market rate that has to be paid, not the NMW. In many places the market rate will be higher than the NMW or National Living Wage.

In the case of Luke Davey v Oxfordshire County Council case, the High Court ([2017] EWHC 354) rejected Davey’s claim that the council had failed to evidence that the NMW would be sufficient for him to pay his PAs given local market forces, a ruling upheld on appeal ([2017] EWCA Civ 1308). However, this case  is not authority for the proposition that paying the NMW is easily defensible, and nobody, in CASCAIDr’s view, can be made to be an employer as the price of being granted a direct payment. There is no duty on a direct payment client to make it cheaper for the council to turn them into commissioners, in order to deserve a direct payment.

Councils will not have to gird up for dealing with direct payment clients suing them for a restitutionary remedy for reimbursement of back pay for claims made by employees.

Government and all political parties, it seems, will be able to carry on ignoring the crisis in adult social care, and the view of the House of Commons’ public accounts committee that the sector’s leadership in the Department of Health and Social Care cannot actually evidence that adults’ care is sustainably funded.

We do not think that there will be an appeal, in the current climate. If Unison were to ballot its members, working in care, it is thought that more of them would prefer to preserve their jobs than threaten the market with total collapse, and would not want to sue their employers for back pay. That is the real world that we live in, and nobody is able to ignore the consequences.