The Court of Appeal in Mencap

Nathaniel Caiden considers the Court of Appeal ruling on sleep-in shifts and the National Minimum Wage.

The Court of Appeal in Royal Mencap Society v Tomlinson-Blake and Shannon v Rampersad [2018] EWCA Civ 1641 were concerned with the issue of whether "sleep-in" workers were entitled to National Minimum Wage for the time asleep. In short, it determined no and seemingly, one may think, it could mark a sea of change on the fraught issue of the National Minimum Wage (“NMW”) in the "sleep-in" context.

Brief explanation of NMW

In fact, the National Minimum Wage Regulations 1999 and 2015 have probably left many a lawyer, and judge, scratching their heads. Therefore, before analysing the Court of Appeal’s decision it is probably worth briefly setting out the steps:

1. One first has to establish whether a worker was engaged in “time work”, “salaried hours work”, “output work” or “unmeasured work” (or a mixture of more than one of these).
2. Then, one has to establish how many hours of each of these types of “work” a worker has “worked” within a pay reference period.
3. Additionally, one also has to establish whether any periods when the worker is “available for work” or travelling that can be “treated as being working hours.”
4. The NMW must be paid for the total of those hours.

The relevant “availability” provisions for the purposes of this case are regulations 15 and 16 of the 1999 Regulations, and regulations 32 and 27 of the 2015 Regulations. They contain similar but not identical provisions and are not all repeated here, but for reference regulation 32 for the 2015 Regulations states:

“(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.

(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.”

Somewhat unhelpfully, “work” is not defined in the Regulations.

Previous case law

With the above context in mind, it is worth noting that the treatment of “sleep-in” workers for NMW purposes has been the subject of a significant body of case law.

The leading case, British Nursing Association v Inland Revenue [2003] ICR 19, concerned nurses who operated a 24-hour telephone assistance line from their homes overnight. They had to answer calls as they came in, but could do as they pleased, including sleep, between calls. The Court of Appeal held that the nurses were “working” for NMW purposes throughout their shift, not just when actually answering calls, despite the fact that they were permitted to sleep in between calls.

In Scottbridge Construction Ltd v Wright [2003] IRLR 21, a night watchman had to perform some tasks at the start and end of his shift. For roughly a five-hour period each night, he had to remain on the premises to deal with any alarms or answer the telephone, but in reality, he was rarely called upon during this time. He was provided with a mattress in the office and permitted to sleep. The Court of Session found that the “work” he was paid for under his contract was for his attendance, and he was entitled to the NMW for the duration of his shift, including the parts when he was asleep.

The same principles were applied in a number of subsequent EAT cases including:

• Burrow Down Support Services Ltd v Rossiter [2008] ICR 1172: Elias J recognised at paragraph 25 the “artificiality in saying that someone is working when he is sleeping” but relied upon the justification given by Lord Johnstone at paragraph 9 of Scottbridge: “It is wholly inappropriate for the employer while requiring an employee to be present for a specific number of hours, to pay him only for a small proportion of those hours in respect of the amount of time that reflects what he is physically doing on the premises.”
• Whittlestone v BJP Home Support [2014] ICR 275, in which Langstaff P held: “where specific hours at a particular place are required, upon the pain of discipline if they are not spent at that place, and the worker is at the disposal of the employer during that period, it will normally constitute time work”
• Esparon v Slavikovska [2014] 1037, where Serota J held: “the Claimant’s job when she was required to sleep in on the premises was one where she was entitled to be paid simply for being on the premises, regardless of whether she worked or not or whether she carried out her regular duties. She was paid simply to be there.”
• Anderson v Jarvis Hotels PLC UKEATS/0062/05/RN; MacCartney v Oversley House Management [2006] UKEAT 0500/05, [2006] ICR 503.

However, some cases fell the other side of the line, and time spent asleep was found not to constitute “work” but simply time “available for work.” The sleep-in exception therefore came into play. See for example Wray v J.W. Lees & Co (Brewers) Ltd [2011] UKEAT 102/11, [2012] ICR 43 (a pub manager required to sleep in the accommodation above the pub as a security measure, but without any ongoing responsibilities and permitted to pop out); South Manchester Abbeyfield Society Ltd v Hopkins [2010] UKEAT 79/10, [2011] ICR 254 (residential care worker found to be “on-call” outside her “core hours”); Governing Body of Binfield Church of England Primary School v Roll [2016] UKEAT 0129/15 (school care taker had to be contactable and within a reasonable distance between shifts was “on call” not “working”).

In Focus Care Agency Ltd v Roberts [2017] ICR 1186, the EAT (Simler P) found held that in determining whether a worker was “working” for the purposes of the NMW, a “multifactorial test” should be applied. She identified potentially relevant factors such as the employer’s purpose in engaging the worker, including whether the workers presence is required to comply with a regulatory or contractual obligation; the extent to which the worker’s activities are restricted by the requirement to be present and at the disposal of the employer; the degree of responsibility undertaken by the worker; and the immediacy of the requirement to provide services.

Updated guidance following the case law

In 2015 the Government issued updated guidance to employers to reflect the pattern that had emerged from this body of jurisprudence. HMRC enforcement of the NMW for sleep-in workers reflected the approach of the courts that time asleep could, in some circumstances, amount to “working time.” However, given the strain that the Government recognised the legal developments placed on employers who had historically paid sleep-ins by way of an allowance less than the NMW (in reliance on earlier Government guidance), it set up the Social Care Compliance Scheme and temporarily modified its policy on enforcing the NMW in the social care sector. HMRC indicated that it would waive fines in respect of non-compliance found to have occurred prior to July 2017 and suspended HMRC enforcement activity concerning payment of sleep-in shifts until October 2017. It is understood that the general practice of residential care providers is now to pay the NMW for all hours of the shift, but many have been unable to meet their back pay liabilities, and have been lobbying the government for assistance.

In light of today’s Court of Appeal judgment, all this may change again.

The Court of Appeal’s judgment and analysis

In the sole judgment, Lord Justice Underhill overturns a significant body of case-law and held that “sleep-in” residential care workers are only entitled to the National Minimum Wage when they are awake and “actually working”, not when they are asleep and therefore, he held, simply “available for work” (see paragraph 86).

He praised Simler P’s “valiant attempt to reconcile” earlier authorities but considered that “even in the light of her careful analysis the kinds of distinctions that are required seem to me elusive; and one advantage of a conclusion that Burrow Down was wrongly decided is that this difficult and intractable case-law can be simply put to one side.” (paragraph 84)

Underhill LJ adopted the “bright line” approach he found to be missing from previous authorities. He held at paragraph 43:

“since the sleep-in exception [regulations 15/16 of the 1999 Regs; 32/27 of the 2015 Regs] only applies in availability cases and not in cases where the worker is actually working, it is strictly necessary to ask first into which of those two categories a worker who is sleeping in falls.  However, that is for practical purposes an unnecessarily elaborate approach.  The self-evident intention of the relevant provisions is to deal comprehensively with the position of sleep-in workers.  The fact that their case is dealt with as part of the availability provisions necessarily means that the draftsman regarded them as being available for work rather than actually working.  That is hardly surprising: it would not be a natural use of language, in a context which distinguishes between (actually) working and being available for work, to describe someone as “working” when they are positively expected to be asleep throughout all or most of the relevant period.”

The concept of "expectation of sleep" recurs throughout the judgment (no fewer than 16 times is such analogous phrasing used).  Critically, this is the basis on which Underhill LJ seeks to distinguish BNA at paragraph 57 (emphasis added):

“The [BNA] decision certainly establishes that the fact that a worker is entitled to go to sleep in the intervals between particular tasks is not necessarily inconsistent with them actually working, for the purposes of regulation 3, during the entirety of the period; but it does not establish that that that will be so in a case of the kind with which we are concerned in these appeals, where the essence of the arrangement is that the worker is expected to sleep.”

(see also paragraph 78 where this view of BNA is reinforced).

The simplicity of the “common sense use of language” approach is superficially attractive. However, there is apparent difficulty reconciling this with the judgment with BNA and Scottbridge, which required Underhill LJ to distinguish both cases.

The Court of Appeal in BNA found that the nurses were undertaking “time work” within the meaning of regulation 3 of the 1999 Regulations even when they were asleep between calls. Regulation 15, which deemed working time when the worker was available for work, except when they were asleep, did not therefore come into the equation.

In the Royal Mencap/Shannon appeal, Underhill LJ drew a distinction between “actual work” and time “available for work” at the regulation 3 (1999) / 30 (2015) stage. He found that if a worker is expected to sleep, that time must fall into the latter category for establishing whether it constituted “time work” under regulation 3/30 (see paragraph 88). However, arguably this is inconsistent with BNA, where the time only “available for work” between answering calls when permitted to sleep did fall within scope of regulation 3.

The grounds on which Underhill LJ distinguished Scottbridge were (1) significant duties at either end of the shift; (2) only able to sleep for 5 hours; and (3) being provided with a mattress in the office as opposed to a “proper bed in an area set aside for sleeping".  All are elements probably not uncommon in the residential care sector.

At paragraph 79 he states: “I quite accept that the distinctions are subtle, but they are in my view sufficient to justify a difference in outcome: it must be borne in mind that the decision which side of the line dividing “actual work” from “availability for work” a given case falls is factual in character, and in marginal cases different tribunals might well assess very similar facts differently.”

Comment

Care providers concerned about their back pay liabilities and squeezed budgets in these times of austerity will welcome today’s judgement. The Government, facing pressure to assist care providers meet their back pay liabilities, will also be relieved.

However, the tens if not hundreds of thousands of already low paid sleep-in workers who might see pay cuts as a result of the decision (potentially effected by dismissals and re-engagements if they do not agree to contractual variations, thus depriving them of certain statutory protections) will be less pleased.

It remains to be seen whether and if so how HMRC will alter its enforcement policies and what will happen in respect of any penalties for underpayments based on what was previously understood to be the correct legal position. Some claims for back pay already before the courts may be withdrawn. That said it is notable that one of the parties, Mencap, has already issued a press release calling on better pay for care workers and in fact changes to the law to ensure that sleeps ins are being paid a "higher rate" (https://www.mencap.org.uk/advice-and-support/stopsleepincrisis)

For the lawyers, there is likely to be further work in this domain. Having eschewed the “multifactorial test” adopted by the EAT in favour of bright line clarity, Underhill LJ has arguably still left us with one.

He has stated that the judgment is limited to the facts of sleep-in workers who are “contractually obliged to spend the night at or near their workplace on the basis that they are expected to sleep for all or most of the period but may be woken if required to undertake some specific activity,” but in the footnote to paragraph 79 suggests that night-watchmen with patrolling duties are “comfortably on the “actual work” side of the line”. Has the dividing line in fact just shifted so that where there is an expectation of being woken frequently during the night, being permitted to sleep in between could still constitute “work”? Would a residential care worker who is expected to wake up at set times every couple of hours to do a two-minute check on a resident, but otherwise expected to sleep for the majority of the night, still be “actually working” throughout the shift? Or will today’s judgment reduce their entitlement to just 10 minutes’ pay at NMW rates for their very broken night’s sleep?

Nathaniel Caiden is a barrister at Cloisters. He can be contacted on 020 7827 4000 or This email address is being protected from spambots. You need JavaScript enabled to view it.. Caspar Glyn QC and Chesca Lord from Cloisters appeared for Mr Shannon.