Latest ruling on back pay offers care providers some salvation; what’s next?

The court of appeal ruled that care providers do not have to pay staff the National Minimum Wage (NMW) for sleep-in shifts, overturning a previous ruling, as well as a significant body of case law. The decision has been made that the NMW only applies when staff are working, not when they are asleep and classed only as ‘available to work’.

On the face of it, this offers some relief to care providers who faced the prospect of having to fund substantial back pay but we look at what the implications of this are and what the next steps may be…

Where does the ruling apply?

Not necessarily all sleep-in shifts are covered by the ruling; the judgement was based on the case of staff being “expected to sleep for all or most of the period but may be woken if required to undertake some specific activity”. Thus, it applies only to those who are ‘available for work’.

However, there are grey areas. For example, are sleep-in staff required to carry out regular checks on service users during the shift? And how often will sleep-in staff be likely to be required to work through the night?

The implications for care providers

Some large organisations had already made the decision to increase pay for sleep-in staff and whilst the cost implications are significant, it would seem unlikely that they will revert to paying less for such shifts. Budgets will have been adjusted to account for this and reversing such a decision could result in reduced staff satisfaction and bad publicity. Such a change could also be restricted by contractual/employment law obligations.

On the other hand, those care providers who have yet to increase pay to NMW are very unlikely to do so now. Though, there are benefits to be had by doing so, such as an increase in competitive advantage when looking to recruit and retain employees. However, if providers do decide to increase the sleep-in rate they offer, it is likely that they will have to obtain additional funding.

What about those providers who have joined the Social Care Compliance Scheme?

When the previous ruling was made, sleep-in shifts were subject to the NMW’s Social Care Compliance Scheme. The scheme is voluntary and gives providers a year to identify what they owe to workers, whilst being supported with advice from HMRC. Those providers who identify they owe staff at the end of the self-assessment then have three months to pay their employees. It is unclear what will happen to those who have already joined the scheme at this stage as HMRC are yet to comment in light of this recent judgement.

Are local authorities going to reduce sleep-in rates?

Whilst local authorities can now make the decision to reduce sleep-in rates, this could have a devastating impact on an already underfunded sector. Only will time will tell whether local authorities will follow suit.

For any queries surrounding your Care organisation’s insurances, contact the team at care@mclarroninsurance.com or by calling 01653 697055.

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