Carers who have to sleep at work in case they are needed overnight will NOT be paid minimum wage after a landmark court ruling.
The Court of Appeal overturned the policy after care firms warned it could cost billions – but workers’ unions are now furious.
Three leading judges today said carers were only entitled to minimum wage when they were required to be awake for work.
That overturned a previous tribunal ruling that had led to the government demanding years of back pay, worth hundreds of millions of pounds.
A spokesman for Care England, which participated in the appeal, said the ruling "finally gives a clear steer" on the issue following years of uncertainty for the care sector.
But unions slammed the "backward-facing" decision, and are considering appealing the judgement in a bid to fight for their low-paid workers.
At a hearing in March, Mencap challenged a tribunal decision made in favour of Claire Tomlinson-Blake, a Mencap support worker in the East Riding of Yorkshire.
Mrs Tomlinson-Blake received a salary for her full-time job helping vulnerable adults living in their own homes, and sometimes had to work a sleep-in shift between 10pm and 7am.
For those shifts she was paid an allowance of £29.05, which included pay for an hour’s work.
If she was woken in the night and had to work for more than an hour, she would receive extra pay for the time worked.
But the Employment Tribunal found she used her "listening ear" and her experience to know when she was needed, and was "working" even when she was asleep.
The tribunal said she was entitled to receive an hourly minimum wage, which would have been more than £60 per shift, a decision upheld by the Employment Appeal Tribunal (EAT) last year.
However today Lord Justice Underhill, sitting with two other senior judges, said: "For the reasons which I have given I believe that sleepers-in… are to be characterised for the purpose of the regulations as available for work… rather than actually working… and so fall within the terms of the sleep-in exception.
"The result is that the only time that counts for national minimum wage purposes is time when the worker is required to be awake for the purposes of working."
The appeal was resisted by Mrs Tomlinson-Blake.
The court also rejected an appeal by a Surrey care home worker who failed to convince the Employment Appeal Tribunal that he should have been paid the minimum wage for shifts when he was "on call".
Care England, the body which represents independent care providers, said the case could have cost the sector £400 million in back-dated pay and £200 million a year from 2020 if the court had ruled workers should be paid the minimum wage.
The body’s chief executive Professor Martin Green said: "We welcome the Appeal Court ruling and 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."
And lawyers for the Local Government Association, which represents councils, said its members would face "very significant unfunded historic liabilities" if Mencap’s appeal was not allowed.
But the Unison union, who brought the original case on behalf of Claire Tomlinson-Blake, said the ruling was a "mistake".
But Unison general secretary Dave Prentis said the blame should be "laid at the Government’s door".
He said: "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.
"Sleep-in shifts involve significant caring responsibilities, often for very vulnerable people.
"With too few staff on at night, most care workers are often on their feet all shift, only grabbing a few minutes’ sleep if they can.
"That’s why it’s such a disgrace that workers have been paid a pittance for sleep-ins – with some getting just £30 for a 10-hour shift.
"As a society we should value care staff and the work they do, but unfortunately we don’t. After this judgment who could blame care workers for leaving in their droves."
“Sleep-in shifts involve significant caring responsibilities, often for very vulnerable people. With too few staff on at night, most care workers are often on their feet all shift, only grabbing a few minutes sleep if they can.
“That’s why it’s such a disgrace that workers have been paid a pittance for sleep-ins – with some getting just £30 for a ten-hour shift.
“As a society we should value care staff and the work they do, but unfortunately we don’t. After this judgment who could blame care workers for leaving in their droves.”
As a result of the judgment, Unison is considering an appeal to the Supreme Court.
The GMB union, which also represents care workers, echoed this view.
National Secretary Rehana Azam said: “This is a backward-facing judgement for low paid, mostly women, care workers who look after the most vulnerable in our society.
“The Employment Tribunal, Employment Appeal Tribunal both ruled that employees should be paid on an hourly rate basis when undertaking this type of work.
“We would hope that any appeal to the Supreme Court will see that common sense approach to the issue restored; so that where a job requires you to sleep in at a premises so that you can be on hand to help a service user, you should be paid a proper hourly rate for those hours.
“Care workers should be paid at least the national minimum wage for time spent being on call whilst on so-called sleep-ins."
However Cllr Izzi Seccombe, Chairman of the Local Government Association’s Community Wellbeing Board, welcomed the ruling.
She said: “This ruling will come as a relief to care providers and councils because it removes considerable uncertainty and a potential considerable unfunded burden on top of already significant financial pressures on the adult social care sector.
“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.
“As we said in our submission to the court, 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.
“However, today’s decision does little to ease the financial crisis facing social care. There is a £3.5 billion funding gap facing adult social care by 2025. This gap needs to be fully funded by government so that providers can plan with more confidence to ensure all people can receive reliable, high quality, personal care and support when and where they need it.”
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