We understand that the Appellant in the matter of Shannon v Rampersad, which was heard together with Royal MenCap Society v Tomlinson-Blake in the Court of Appeal, is committed to pursuing an appeal against the judgment.

It also seems likely that Unison (given its success in the Supreme Court in 2017 in respect of the unlawful implementation of tribunal fees) will support an appeal by Tomlinson-Blake against the decision.

Whilst we await confirmation that these appeals are being pursued, many employers, particularly in the care sector, will be anxiously considering their options in light of the Court of Appeal's judgment.

Judgment

The Court of Appeal overturned a significant body of case-law to find that sleepers-in will only be entitled to have their sleep-in hours counted for National Minimum Wage (“NMW”) purposes where they are, and are required to be, awake for the purpose of performing some specific activity.

The particular question being considered in this instance was whether or not the NMW is applicable to sleep-in shifts, including the time spent asleep. In response to which, the Court of Appeal held, unanimously: no.

The Court of Appeal’s findings arguably give effect to the Government’s intention as per the recommendations of the Low Pay Commission that: “For hours when workers are paid to sleep on the work premises, workers and employers should agree their allowance…But workers should be entitled to the National Minimum wage for all times when they are awake and required to be available for work.”

In keeping with this recommendation, Underhill LJ summarised that the effect of the NMW Regulations as a whole is that a worker who is, and is required to be, (a) available for the purpose of working (b) at or near his or her place of work, is entitled to have the time in question counted as time work for NMW purposes unless:

i.        he or she is at home; or 
ii.       the arrangement is that they will sleep (and be given facilities for doing so), in which case only those hours when they are, and are required to be, awake for the purposes of working will count.

He went on to opine that it would not be a natural use of language, in a context which distinguishes between (actually) working and being available for work (i.e. the NMW Regulations), to describe some as “working” when they are positively expected to be asleep throughout all or most of the relevant period.

This appeal was brought in response to the earlier decision of the Employment Appeal Tribunal (“EAT”) that workers may be entitled to the NMW even when sleeping. The EAT found that a “multifactorial approach” should be applied, highlighting that a case by case analysis is imperative in determining a NMW claim of this nature. This has now, however, been overturned by the decision of the Court of Appeal.

Implications

As a result of the EAT’s earlier decision, it was estimated that care providers were facing NMW pay back liabilities amounting to roughly £400 million. This significant liability was placing substantial pressure on those care providers. In response the Government set up the Social Care Compliance Scheme (“SCCS”) and temporarily modified its policy of enforcement of the National Minimum Wage.

With the Court of Appeal’s decision, that back-pay liability has dwindled for now but with it seeming almost certain that the Supreme Court will be asked to make a final determination on the issue, employers will be concerned about what steps they should be taking to protect their positions.

Many employers in response to the EAT judgment took the decision to pay NMW for all hours in a sleep in shift (whether the employee was working or asleep). Employers may now wish to row back from that position to the extent that they are able to.

Such changes are likely to constitute a contractual variation. To achieve this, save for the receipt of either express or implied consent from the affected employees to a further amendment to their terms (which is unlikely given it will involve a pay cut), many employers may have to consider dismissals and re-engagements on the revised terms.

This could potentially be a risky manoeuvre in the event that an appeal to the Supreme Court over turns the Court of Appeals decision. If employers are to take this step it would be advisable to at least ensure the payment of the NMW had previously been provided for all hours of a sleep-in shift for a period of more than three months in order to break the chain of unlawful deductions from wages in the past.

Employers already facing litigation on this matter should make every effort to expedite a resolution of those claims on the basis of the law as it currently stands. 


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Jonathan Pearce

Senior Associate

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+44(0)20 7551 7787

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Posted on 19/07/2018 in Legal Updates

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