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national minimum wage issues in the care sector

18 May 2015

Reports of breaches in National Minimum Wage (NMW) are rife at the moment and appear here to stay for the foreseeable future. Just last week we saw Mitie, who owns one of the largest care providers in the UK (MiHomecare), brought into the spotlight for allegedly failing to pay NMW in respect of the time it takes for carers to travel between clients.

Stacked against employers in this sector are factors such as:

  • the government’s focused investment on enforcement in the care sector a rising ageing population
  • continued local authority funding cuts
  • ever-increasing NMW rates
  • more hours to be included as working time
  • increased use of personal budgets.

To add to this, the law is complex and has been difficult to navigate, having been amended no less than 20 times since the National Minimum Wage Regulations were introduced in 1999. Whilst the Government has responded to this by consolidating the law into what is now the National Minimum Wage Regulations 2015 (introduced on 6 April 2015), it is of note that there have been no substantive changes introduced. The case law is also very dependent on the particular circumstances of the job and, in parts, still unclear.

Is it not reasonable, therefore, to question how NMW compliance can be achieved?

In this article, we focus on one of the more common problem areas that we encounter with employers in the care sector; namely sleep-ins, to assist employers in reviewing their circumstances and addressing any risks until we, hopefully, receive greater clarity on this issue.

Sleep-ins

Regulation 13 of the NMW Regulations 1999 provided that:

 'time work includes time when a worker is available at or near a place of work, other than his home, for the purpose of doing time work and is required to be available for such work except that, in relation to a worker who by arrangement sleeps at or near a place of work, time during the hours he is permitted to sleep shall only be treated as being time work when the worker is awake for the purpose of working'.

Regulation 32 of the NMW Regulations 2015 now provides that:

 32(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.

32(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.

You’ll see, that there is no change in the legislation on this, merely a re-ordering of the words. The essential point in determining whether NMW is due, would appear to be whether the worker is 'awake for the purposes of working'.

However, when you then turn to the Government’s updated guidance on interpreting this legislation*, it states that where a worker is not actually working but is still required to undertake certain work-related responsibilities whilst asleep, to the extent they could be deemed as working, the general rule is that they should be paid NMW for the entire time that they are at work. Thereby suggesting that a worker does not necessarily need to be awake and that it depends, in fact, on the degree of work-related responsibility they are required to undertake whilst they are asleep.

There are a string of cases that are relevant to this but which are, in places, also contradictory. Nevertheless, they do provide some assistance as to the Tribunal’s rationale in the event that a claim for breach of NMW was presented before it:

  • Burrow Down Support Services Ltd v Rossiter (25 June 2008) – a night watchman who was required to be present at a care home, was permitted to sleep during his shift unless anything untoward happened and save in the last hour when he was required to investigate security breaches. He received £24 per shift and extra payment for times when he was awake. The EAT determined that he was entitled to be paid NMW for his entire shift on the basis that even when he was asleep, he was required to deal with anything untoward that might arise.
  • Whittlestone v BJP Home Support Ltd (19 July 2013) – a care worker was employed to provide care to young adults in their homes. It was a requirement of her role to provide those services during the period between 11pm and 7am, if needed. The worker was provided with sleeping facilities and permitted to sleep during this time. She was paid a fixed rate of £40 for the sleep-in. Notwithstanding the fact that her services were never actually required during sleep-ins, the EAT held that she was entitled to be paid NMW for the entire sleep-in because her presence at the place of work was part of her work, irrespective of the lack of activity during this time. On the face of it, it is difficult to comprehend the rationale for paying NMW when the worker never actually does any work and is asleep. However, when you read the judgment, it is apparent that what was crucial to this decision was that this care worker would have been disciplined if she had not been present throughout the sleep-in.
  • Esparon t/a Middle West Residential Care Home v Slavikovska (8 May 2014) – this case concerned a senior care assistant who was paid an hourly rate for day shifts and a rate of £25 for a 10-hour sleep-in duty at night. She was permitted to sleep during these shifts and provided with facilities for doing so. The Claimant alleged that she had carried out activities during those sleep-ins and had not been allowed to sleep. The EAT concluded that all of her night-shift hours were working time for which NMW should be paid. The fact that the employer was required by the Care Homes Regulations 2001 and the Health and Social Care Act 2008 (Regulated Activities) Regulations 2010, to have staff available on the premises at all times 'just in case', was considered to be a powerful indicator that she was being paid to simply be there and was thus deemed to be working regardless of whether work was actually carried out.
  • Wray v JW Lees and Co (Brewers) Ltd (14 July 2011) – a temporary pub manager who was required to sleep on the premises each night but who could leave at any time, was not entitled to NMW during this time. The Claimant was required to sleep on the premises as a minimum security measure 'just in case' and, if anything untoward happened, she was expected to deal with it appropriately. Despite this, the EAT considered that, in comparison with a night watchman or a care worker in a home for the disabled, she only had a very limited degree of responsibility and was not required to do any work during the night.

Viewing this as a whole, therefore, it is reasonable to conclude that where a worker is allowed to sleep but has more than a limited degree of work-related responsibility during that time, even time where they are asleep will be deemed to be working time and should be paid at NMW. Where there is a legal or regulatory requirement for them to be on the premises (as opposed to it being convenient) or where they would be subject to disciplinary action were they not on the premises, this will be the case even more so.

Employers may find that the particular circumstances of their carers may be distinguishable from these cases and that they may have a valid argument to align their carers more with those who are “on-call”; being merely available for work but not actually working. In such circumstances, NMW will not be payable when they are asleep.

It seems much will turn on the nature of the work-related obligations to which the worker is subject while they are asleep and whether there are statutory/legal requirements for them to be on the premises.

Penalties

  • Since October 2013, the government has the power to publicly name and shame employers, having reportedly named over 92 employers with total arrears of over £316,000 owed to workers, since this time.
  • As well as reputational damage, financial penalties have been significantly increased so that employers can now potentially face fines of up to £20,000, per underpaid employee.
  • Whilst criminal prosecutions are scant, HMRC nevertheless has the power to undertake a criminal investigation for the most serious offences. The fine on conviction is unlimited.
  • Employees can bring claims in the Employment Tribunal for unlawful deductions from wages. Such claims generally need to be brought in the Tribunal within 3 months of the last deduction from wages. However, claims may also be brought in the civil courts and workers have 6 years to bring these claims. Therefore, claims have the potential to result in back pay for many years.

Mitigation

Until these problem areas are addressed with any clarity (and of note is the fact that the conservatives said very little on this in their manifesto), employers are advised to:

  • Keep full records of the precise hours worked and payments made – this is a statutory requirement. Records should be sufficiently detailed to include the various elements that make up a worker’s pay (e.g. total hours worked; total pay paid for those hours; rates of pay per hour; sleep-ins; travelling time; contact time; time spent training and time spent awake during sleep-ins).
  • A lack of records will inhibit your ability to self- check but will also delay the time it takes for you to respond to any investigation. For example, when HMRC issue a notice of underpayment, employers only have 28 days to appeal. Failing this, the government will consider them for naming via a press release.In addition, if you cannot prove that an employee has been paid NMW, it will be presumed that you have not.
  • Records should be kept for at least 3 years from the end of the pay reference period to which they relate but it would be advisable to retain these for 6 years after employment has ended to align with the limitation period for civil claims mentioned above.
  • Training – ensure your managers and those responsible for setting rotas are aware of the legislative requirements. In the event of an HMRC investigation, interviews will be conducted with relevant staff and so it is important that they are aware of both yours and legislative requirements.
  • Remember that NMW rates change in October of each year - this year alone has seen the government boasting its largest 'real-terms' increase in the NMW since 2008. From 1 October 2015, rates will rise to: - adult rate (21 and over) - £6.70 per hour - 18 to 20 year olds - £5.30 per hour - 16 to 17 year olds - £3.87 per hour - apprentice rate - £3.30 per hour

* Department for Business Innovation and Skills - Calculating the National Minimum Wage – February 2015

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