Do you pay your carers a bonus or an enhancement for working unsocial hours? If so, the bad news is that these payments may not count towards payment of the National Minimum Wage. The good news is that these sorts of payments can be restructured to ensure that they do count.
This issue was highlighted by the Employment Appeal Tribunal in the recent case of Smith v Oxfordshire Learning Disability NHS Trust.
The claim
Mr Smith worked 15 hours per week in a care home for adults with
learning disabilities as a Lifestyle Support Worker. He was
occasionally required to work additional hours sleeping in at the
care home in case he was needed during the night. He was paid:
- a salary for his usual 15 hours per week;
- a flat rate "sleeping in allowance" of £25 for each night spent at the home; and
- an anti-social hours enhancement for periods worked immediately before and after sleeping at the home, and for any time his sleep was disturbed.
Mr Smith brought a claim arguing that the sleeping in allowance
should not count towards payment of the NMW. On this basis, he said
that he had been underpaid by £205.59 over a period of 3
months. The care home disputed his claim.
The law
The National Minimum Wage Regulations (NMW Regulations) state that
a money payment which is due to an individual's:
- working arrangements; or
- work or personal circumstances
does not count towards the minimum wage unless it is:
- consolidated into basic pay; or
- a bonus for good performance.
The decision
The EAT went on to decide that the "sleeping in
allowance" was not a bonus or an enhancement but Mr
Smith's basic pay for doing that part of his job. This meant
that the "sleeping in allowances" did count towards
payment of the NMW.
However, the EAT did say that the anti-social hours enhancements Mr
Smith was paid for periods worked immediately before or after
sleeping at the home, and for the time his sleep was disturbed
while he was sleeping at the home were payments made because of his
work arrangements. For this reason, they could not be counted when
calculating the average wage paid to the employee for the purposes
of the NMW.
What counts and what does not?
- Basic pay for carrying out a job or task will count towards the NMW;
- Enhancements, bonuses or payments on top of basic pay will probably not count towards the NMW unless they amount to additional pay for good performance;
What should employers do if they need enhancements or bonuses to count towards NMW?
- Change contracts to consolidate enhancements or bonuses into basic pay;
- Consult with workers about consolidation.
Contracts generally need to be changed by agreement but, if the total payment does not change, it seems likely that care providers will be able to reach agreement with their staff, provided that there is good communication.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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