February 10, 2020

Will Supreme Court ruling on sleep-in shifts keep care providers awake

The impact of the ruling could be significant due to an estimated sector-wide liability of £400m if all time spent during sleep-ins is found to be working time for National Minimum Wage purposes. Given the significant funding crisis already facing the sector, and the current Government’s apparent lack of an imminent solution, the financial viability of the sector could be brought into considerable doubt. Mencap alone has stated that it has a £20m liability and is at risk of insolvency if required to pay it.

James Sage, Head of our Social Care team, which specialises in advising care providers, said: “For many years, care providers have paid staff carrying out sleep in shifts on the basis that the National Minimum Wage was not payable for the time spent asleep. This was consistent with HMRC guidance at the time. It also reflected the sleep-in rates paid by many local authorities which were often as low as £30 and barely covered providers’ costs of providing the service.

“However, from 2012, employment tribunals challenged this position and found that sleep-in shifts were working time and subject to the National Minimum Wage, only for the Court of Appeal in the Mencap case to decide differently in 2018.

“The confusion and uncertainty has caused considerable anxiety for care providers, who we all rely on to provide essential services to the most vulnerable in society, through no fault of their own.”

Despite the Court of Appeal ruling that only time spent awake and working is subject to the National Minimum Wage, HMRC has insisted that providers remain part of its Social Care Compliance Scheme, which was set up to encourage providers to voluntarily declare their non-compliance to HMRC.

James said: “If the Supreme Court reverses the Court of Appeal decision, HMRC will be armed with all of the necessary financial information to enforce repayment from providers. However, many providers will simply not have the resources to pay so the Government needs to plan for alternative solutions to ensure the financial viability of the sector, which cannot be allowed to fail.

“We expect the Supreme Court to agree with the Court of Appeal decision that it was not Parliament’s intention for time spent asleep to be subject to the National Minimum Wage. If it doesn’t there will be a lot of work and sleep-less nights ahead for providers before they can finally put the issue of sleep-ins to bed once and for all.”

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