The Court of Appeal has reversed an Employment Tribunal judgment which could have cost the care sector £400m in back pay to staff.
The ruling relates to social care workers who had been paid a flat rate for shifts where they slept in a patient's house or at a care home to provide support if necessary, known as "sleep-in shifts".
Mencap and Care England – the representative body for social care providers - went to the Court of Appeal in March to challenge an Employment Tribunal ruling, made in 2016 and upheld at appeal last year.
The tribunal rulings, in favour of a sleep-in shift worker, Clare Tomlinson-Blake, found Mencap should have paid her the full minimum wage during sleep-in shifts.
The ruling would potentially have led to charities having to pay back pay and penalties to large numbers of staff, which care charities estimated would cost the sector £400m and result in some organisations going bankrupt.
The Court of Appeal heard Royal Mencap Society v Tomlinson-Blake together with another case, Rampersad v Shannon, in March.
Judges heard that Tomlinson-Blake had received a flat rate of £29.05 plus one hour’s pay at £6.70 for an overnight shift of between 10pm and 7am. If she was required to be awake for more than one hour she would receive extra pay.
Matthew Wort, a partner at Anthony Collins solicitors who represented Care England, 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.”
The judgment is likely to be appealed by unions to the Supreme Court.
‘Care workers deserve a better deal’
Responding to the decision, Mencap said the decision removed uncertainty around the issue and called on the government to ensure that care providers were properly funded in future.
Derek Lewis, chair of Mencap, said: “The court’s decision has removed the uncertainty about how the law on the National Living Wage applies to sleep-ins. The prospect of having to make large unfunded back payments had threatened to bankrupt many providers, jeopardising the care of vulnerable people and the employment of their carers.”
He added that the charity had brought the case because of the “mayhem” that would have been caused otherwise.
“Many hardworking care workers were given false expectations of an entitlement to back pay and they must be feeling very disappointed," he said. "We did not want to bring this case. We had to do so because of the mayhem throughout the sector that would have been caused by previous court decisions and government enforcement action, including serious damage to Mencap’s work in supporting people with learning disabilities.”
He said that “care workers deserve a better deal” and should not be among the lowest paid sectors. He said Mencap would continue to pay workers at a higher rate for sleep-in shifts but that government should legislate to make this compulsory and ensure it is funded.
“We also call on government to ensure that the social care sector and, in particular, the specialised support that is required for people with a learning disability is properly funded and its workers are paid what they deserve in the future,” he said.
'No winners in this decision'
The #SolveSleepIns Alliance, a coalition of care providers, also said the government should take action.
Rhidian Hughes, chief executive of the Voluntary Organisations Disability Group said: “There are no winners from this decision. Now the government has a chance to do the right thing - enshrining and supporting the National Minimum Wage (NMW) by ensuring legislation is clear that all workers are entitled to the NMW and funding all essential services at this level.
“We are calling for additional new money pledged for overnight care to fund the NMW to make sleep-ins fair and fit for the future.
“We call on government to make clear its intention to introduce urgent legislation so that time spent asleep is taken into account when calculating NLW/NMW.
“There needs to be a clear set of rules about exactly when NLW applies, and for government to fund these vital statutory services to avoid any future crises. Without this decisive action, our staff remain in an uncertain position with regards to their pay.”
Tim Cooper, co-chair of Learning Disability Voices and chief executive at United Response, said: “We remain committed to paying our staff fairly for the work they do.
“Our workforce is our greatest asset, we believe that National Living Wage (NLW) rates should apply for sleep-in shifts, the government has said that they agree. We call on the government to act swiftly and decisively to remove the confusion by setting out in law that NLW applies to sleep in shifts and to remove the fear by ensuring providers are properly funded for all shifts, including sleep-ins, at the NLW.
“There is a moral obligation for the government to ensure a fair deal for employees and employers alike. It is now over to the government who need to provide stability for the sector after the last three years of uncertainty.”
'A huge mistake' says union
Unison, which supported Tomlinson-Blake's application, called the judgment a "huge mistake" but joined Mencap in saying that the ultimate failure to solve the issue lay at the door of the government.
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."
Unison said it was considering an appeal to the Supreme Court.