Court of Appeal reverses £400m back-pay bill to care providers

Flat rate of pay for sleep-in shifts deemed fair with only the hours spent awake counting as worked.

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The Court of Appeal has overturned a tribunal ruling that social care staff should be paid the national living wage for sleep-in shifts – but the case may yet reach the Supreme Court.

Mencap, as well as the intervening parties including Care England – the UK’s largest representative body for independent providers of adult social care – sought a landmark ruling to reverse the decision on sleep-in shift back-pay that could have cost providers an estimated £400m – amid claims many would be pushed into collapse.

Anthony Collins Solicitors, which represented Care England in the case, said the ruling will safeguard the care of 1.2m vulnerable people in the UK when the substantial arrears would have caused more than two-thirds of providers to enter bankruptcy.

As a result of the Court of Appeal ruling, the £400m allegedly owed to care workers who had been deemed to be underpaid for overnight shifts is no longer considered to be due under current legislation.

Anthony Collins partner, Matthew Wort, said the “magnitude” of this ruling should not be underestimated, particularly as the care sector is already forecast to face a £2bn funding gap by 2020.

”Challenging the original findings our argument was clear: under the current national minimum wage rules those undertaking sleep-in shifts should not be considered as working whilst asleep,” Wort said.

The tribunal ruling in 2015 effectively left providers with a collective liability for pay backdated over six years.

Considering an appeal to the Supreme Court Unison, which was involved in the original tribunal, said the Court of Appeal ruling was “at odds with legal precedents and common sense understanding of what counts as work”.

UNISON general secretary, Dave Prentis, said: “This judgment is a mistake, but let’s be clear where the fault lies. The blame for this sorry state of affairs that’s hitting some of the country’s lowest paid workers must be laid at the government’s door.

“Ministers are so consumed by Brexit that they’re ignoring huge problems around them.

“Social care is in crisis, and this situation wouldn’t have arisen if the government had put enough money into the system and enforced minimum wage laws properly.”

The court ruled that sleep-in shifts fall into an exception from the national minimum wage as staff are only available for work.

According to interpretation of regulation, this means the minimum wage would only be payable when the carer was awake and working and not while asleep.

In the wake of the appeal ruling, Care England has called on the government for clarity.

“We hope we can now move forward, without a huge back pay liability hanging over the sector and threatening the ongoing care of thousands, to ensure we focus on getting social care services funded properly for the future,” said Care England chief executive Martin Green.

Chair of the LGA community wellbeing board, Izzi Seccombe, said the ruling will come as a “relief” to providers and councils already under significant financial pressure.

“We now need urgent clarity on all enforcement action for back payments when the national minimum wage wasn’t paid to ensure that no provider will face further action.”

“We strongly support care workers being paid a fair wage for their valued work, but if this appeal was upheld it would have increased the risk of a sinkhole in adult social care,” said Cllr Seccombe.

But she warned the decision does little to ease the financial crisis facing social care.

Care England intervened in the 2015 Mencap vs Tomlinson-Blake EAT case that found care providers such as the Royal Mencap Society liable to remunerate employees at the National Minimum Wage (NMW) for each hour of sleep-in-shifts completed, with back payments to cover the last six years.

A recent sector survey indicated, however, that on average, only 1% of time in sleep-in-shifts is spent actually working.

Previous court decisions were a shift from the standard practice where workers receive a flat rate per sleep-in shift, with minimum wage awarded at any point in the night spent awake working.

The successful case put forward by Mencap and Care England relied on looking at the Low Pay Commission recommendations when the legislation was introduced calling for the initial rules on remuneration to be honoured and the care sector spared potential bankruptcy.

Now, the Court of Appeal decision is expected to raise further questions around the Government’s Social Care Compliance Scheme (SCCS).

This was rolled out following the initial court decision, which asked care providers to calculate the total amount owed to both existing and previous staff in the form of sleep-in back-pay.

And the ruling arrives against a backdrop of growing criticism around service quality and an estimated £2bn funding shortfall with a new minister for social care preparing to deliver a social care green paper later this year.

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