National Minimum Wage – Status of “sleep-in payments”Wednesday, August 5th, 2009
The decision of the London Employment Appeal Tribunal (EAT) on 24 June 2009 in the case Smith v Oxfordshire Learning Disability NHS Trust, clarifies the status for National Minimum Wage (NMW) purposes of “sleep-in payments”.
In this particular case, Mr. Smith worked as a care worker in a residential home and, in addition to his part-time day job, was required on occasion to “sleep in” at the home. He received two regular payments, namely
- a salary of £517.43 per month, based on a normal working week of 15 hours, at a rate of £7.94 per hour, and
- a “sleep-in payment” of £25 for 9¼ hours, equivalent to £2.70 per hour,
In addition, he was entitled to a “disturbed night” payment in the event of having to a care for an emergency during the sleep-in.
Mr. Smith had appealed the decision of an Employment Tribunal to dismiss his claim that he was being paid less than the NMW because the sleep-in payment was an allowance that should not be added to his pay for NMW purposes.
The issue before the EAT was whether the sleep-in payment should be included in the calculation of the average hourly rate of pay for NMW purposes. The parties to the case were in agreement that the sleep-in hours should be included. The employer argued that the payment should be added into the calculation; Mr. Smith argued otherwise. If the employer was correct, the NMW would only be breached if Mr. Smith had 6 or more sleep-ins in a month; if Mr. Smith was correct, his salary every month was in breach of the NMW.
The EAT referred to Regulation 15(1A) of the NMW Regulations, which says:
“In relation to a worker who by arrangement sleeps at or near a place of work and is provided with suitable facilities for sleeping, time during the hours he is permitted to use those facilities for the purpose of sleeping shall only be treated as being time work when the worker is awake for the purpose of working.”
That clearly suggests that the 9¼ sleep-in hours should not be included in the calculation, but the employer conceded that they must be included, on the basis of
- the 2002 Court of Appeal decision in British Nursing Association v Inland Revenue, where nurses at home overnight were treated as “working” while both waiting for phone calls and taking phone calls, and
- the 2008 EAT decision in Burrow Down Support Services v Rossiter, where a “night-sleeper” in a care home, who could sleep all night but had to get up in the event of an emergency, was treated as working throughout the night.
The latter decision makes reference to the judge’s comments in another similar case, that
“The solution for an employer who wishes an employee to be present as a night watchman or the equivalent, is to provide him with alternative and additional work on the premises which enables him both to provide the employer with remunerated time and also the protection of someone on the premises for security reasons.”
The principal issue, therefore, was whether the £25 payment was an allowance or a payment for the hours of the sleep-in. By definition, the NMW Regulations excludes
“any money payment paid by the employer to the worker by way of an allowance other than an allowance attributable to the performance of the worker in carrying out his work.”
There were, therefore, two issues for the EAT to address, namely
- was the sleep-in payment an allowance, and
- if it was, was it “attributable to the performance of the worker in carrying out his work”?
Taking the first point, an allowance is defined as “any payment made by the employer to a worker attributable to a particular aspect of his working arrangements”.
Examples given by the EAT of such “particular aspects” are “working at height, working in a dusty atmosphere, or working in a hazardous environment “. Two members of the EAT were of the view that the sleep-in payment was not, on this definition, an allowance. The other member disagreed, quoting the (then) DTI’s guide to the NMW, that allowances may include “performing special duties over and above a workers normal duties; being on-call for work”. The third member’s view was that “the sleep-ins in which [Mr. Smith] was required to take part were clearly very different from his normal duties and were much more akin to being on-call for work.”
If the majority view is correct, the sleep-in payment was not an allowance and the payment should therefore be included in the NMW calculation. If the minority view is correct, the second point becomes decisive – was it “an allowance attributable to the performance of the worker in carrying out his work”? On this, the EAT was unanimous. If the payment is an allowance, it is attributable to the performance of the worker in carrying out the work.
The EAT’s decision was, therefore, to dismiss the appeal on the basis that
- if the majority view is correct, that the sleep-in payment was not an allowance, the payment must be included in the total amounts paid to Mr. Smith to calculate the average rate of pay for NMW purposes, or
- if the minority view is correct, that the payment was an allowance, it was, nevertheless, attributable to the performance of the worker and, therefore, still falls to be being included in Mr. Smith’s total payments for NMW purposes.
The decision has an obvious impact on care homes who engage staff to sleep-in overnight in case of emergencies. In this particular case, the daytime wages and the sleep-in payment together were still just above the NMW. However, in the absence of any daytime payments, staff engaged just to sleep in overnight, must be paid at least the NMW for the full period, even if they sleep through.
A solution to the problem, as hinted at in the decision, may be to consider turning the “sleep-in” into a night shift, and give the workers productive work to perform during the whole of the night, including the handling of care emergencies.
Smith v Oxfordshire Learning Disability NHS Trust
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