Recent EAT cases offer guidance on rates for on-call night workers

Last week’s news that John Lewis has set aside £36m to rectify its failure to pay the national minimum wage (NMW) highlights how even the biggest UK companies can find it difficult to calculate the rate correctly.

One key area of concern for employers is how to work out pay for people who sleep overnight in the workplace, or who are at home and on-call throughout the night. It was once common practice to pay a flat rate for sleep-in and on-call shifts, with an hourly rate for time spent awake and attending to duties – but this approach was called into question after several cases held that individuals were ‘working’ for NMW purposes while relaxing at home or even sleeping.

In April, the Employment Appeal Tribunal (EAT) handed down its decision in Focus Care Agency v Roberts – three appeal cases that all concerned the calculation of pay for overnight work. The EAT recognised the difficulties that employers face, but concluded that there is no bright line or single key with which to unlock every case; instead, businesses must conduct a ‘multifactorial evaluation’.

EAT guidance

No doubt employers will find it frustrating that so many grey areas remain, but they should pay attention to the four potentially relevant factors the EAT highlighted in this case:

  1. The reason for engaging the worker – if an employer needs someone to be onsite at all times to comply with a regulatory or contractual obligation, it is more likely the individual will be classed as working throughout their whole shift, even if they are asleep or have nothing to do.

  2. Restrictions on the worker’s activities – a worker who is required to remain on the premises throughout their shift and who would be disciplined for slipping away to do something else is more likely to be working for NMW purposes just by being present than someone who is able to come and go as they please.

  3. The degree of responsibility – a care worker who must keep a listening ear throughout their shift and act if required is more likely to be working for their whole shift than someone who is on-call from their own home and is only required to respond to an alarm pager for emergency call-outs.

  4. The immediacy of the requirement to provide services – this is not just about the speed with which a worker is required to act; it is also connected to the level of responsibility they have. The EAT compared a worker who must decide whether to intervene and then deal with the issues with a worker who is woken by another member of staff who has immediate responsibility for intervening.

Although this case does not answer the calls for clarity and certainty in this area, organisations should review their current pay practices in light of the EAT’s guidance, especially given the heavy costs that can result from non-compliance.

Individual workers may be able to bring claims in the civil courts for arrears of pay stretching back six years. HMRC also has the power to take enforcement action against employers, including imposing penalties of up to 200 per cent of the total underpayment (up to a maximum of £20,000 per worker). HMRC will also consider publicly naming businesses that fail to pay NMW and, in the most serious cases, criminal sanctions can apply. For many organisations, the reputational risks are every bit as concerning as the financial threats – which makes it all the more important for employers to keep pay arrangements under review and to get them right.

This article was first published on the People Management website.