How to Avoid National Minimum Wage Underpayments Penalties for Sleep-in Shifts
National Minimum Wage Enforcement Suspension for Social Care Sector
Dated: 12 October 2017 Author: Jack Bonehill, Employment Taxes Consultant
Following an Employment Appeal Tribunal ('EAT') case in April 2017, the Government announced in July 2017 that it was suspending National Minimum Wage ('NMW') enforcement until 2 October 2017 for NMW underpayments in relation to 'sleep-in shifts'. This suspension has now been extended until 2 November 2017 and as such, employers who are potentially affected by this should take urgent action to utilise the suspension and avoid costly penalties.
What are Sleep-in Shifts?
'Sleep-in shifts' are typically shifts where a worker is obliged to be present at a specific location for the shift, but is not obliged to perform duties for the whole duration of the shift and can sleep in periods where there is no obligation to perform duties.
"Don't give
rise to
penalties
of 200%"Without the suspension of NMW enforcement, any NMW underpayments in relation to sleep-in shifts could give rise to penalties of 200% of the underpayments, but the suspension means that these penalties will not apply if the underpayments are corrected during the suspension period. However, any NMW underpayments will need to still be paid to workers.
Act now to take advantage of the suspension
Although NMW underpayments need to be paid, the suspension is highly advantageous for employers with NMW underpayments relating to sleep-in shifts as it means they should not be liable to the severe penalties that an underpayment would ordinarily give rise to.
Why can a worker seek underpayments?
The EAT case, Royal Mencap Society v Tomlinson-Blake UKEAT/0290/16/DM, concerns a social care worker who as part of their role were required to be present at (but allowed to sleep at when their services were not required) a service-user's residence overnight, but were paid below NMW for the period that they were sleeping. The case ruled that the care worker was due the NMW for the time spent sleeping during the 'sleep-in shifts'.
This case is likely to have a major impact on employers operating in the social care sector, since the case was specific to that sector, although it is also likely to have detrimental implications for employers in other sectors where 'sleep-in' shifts are commonplace.
Although the ruling doesn't give conclusive conditions for when time spent sleeping on a sleep-in shift needs to be paid at NMW, it means that a worker is likely to be due NMW for time spent sleeping during sleep-in shifts with similarities to the circumstances in the case, both in the past and future.
What your business needs to check
If a worker is due NMW for a sleep-in shift because of the case:
- there will be historic NMW underpayments due to the worker for such shifts where they were not remunerated at the NMW for the entire duration of the shift and average pay in a pay period is less than the NMW, and
- such shifts in the future need to be remunerated at the NMW for the entire duration of the shift.
We recommend that all employers who have workers that undertake sleep-in shifts urgently review their payment structures to see if they have any historic or current NMW underpayments. If any NMW underpayments are identified, employers must act swiftly to correct these during the enforcement suspension period, otherwise they could be liable to severe penalties for these underpayments. HMRC are generally investing a large amount of resource in to NMW and as such it is crucial that employers are getting this right.
Need further assistance?
For further information on the suspension period, or any other National Minimum Wage queries, please contact us on 0800 298 3899 or email: employmentservices@dains.com.