Update on working time and pay

Two important recent EAT decisions affecting time spent at work have highlighted some key considerations for employers in calculating holiday pay and establishing entitlement to the National Minimum Wage.

Holiday Pay

In Dudley Metropolitan Borough Council v. Willetts and ors the EAT ruled that payments for voluntary overtime must be taken into account when calculating holiday pay if:

• it is paid with sufficient regularity to amount to ‘normal remuneration;
• a failure to make such payment would have the unjust effect of deterring employees from taking leave; and
• despite the voluntary nature of the overtime, it is ‘intrinsically linked’ to the work required under the contract i.e. the purpose of the payment is to reimburse the employee for the additional work undertaken.

This case involved a group of 56 employees with set contractual hours of employment. In addition to those hours, they volunteered to perform additional duties and participate in on-call rotas – something which their contracts of employment did not require them to carry out and the Council had no right to require them to do. The employees received overtime payments, a standby allowance and call out payments if called upon, all of which the EAT held counted towards the calculation of holiday.

National Minimum Wage (NMW)

In Focus Care Agency v. Roberts and other cases the EAT was asked to determine whether employees who were required to sleep-in were working for the full duration of their shift, and therefore entitled to the NMW, or whether they were only entitled to the NMW when they were awake and carrying out work.

Deciding three conjoined appeals, the EAT held that a multifactorial test should be applied and identified four relevant factors to be considered:

• the employer’s purpose in engaging the employee in sleep-in time;
• the extent to which the employee’s actions are restricted by the requirement to be present;
• the degree of responsibility untaken by the employee; and
• the immediacy of the requirement to provide services if an emergency arises

The employees in the first and third appeal, Mr Roberts (R) and Mrs Tomlinson-Blake (TB), were support workers for vulnerable adults. During night shift they had no specific tasks but were required to remain on site in case help was needed. In R, the EAT held that the tribunal had failed to apply the multifactorial test but upheld the tribunal’s decision that R was entitled to paid while sleeping on the basis of his contractual entitlement. In T, the EAT upheld the tribunal’s decision that she was working when asleep and so entitled to the NMW. The tribunal had considered relevant factors including the regulatory requirement for T to be present, the need for her to exercise her judgement and fact that she would be disciplined if she left her post.

In the second appeal, Mr and Mrs Frudd (F) worked on a caravan site and were required to respond to emergency call outs. The EAT held that the tribunal had failed to apply the multifactorial test, specifically, it had not considered the purpose or requirement for F to be present. The tribunal’s decision that F was not working when asleep could therefore not stand and the case was remitted to a fresh tribunal.

While each EAT decision makes separate inroads into the specific legislation to which they relate, they represent a common theme – a requirement to adequately reimburse employees for work done. They serve as a useful reminder to employers to:

• review the hours of work undertaken by employees and workers;
• consider your arrangements for out of hours work and overtime; and
• identify, in advance, the implications of your working practices by taking advice.

If this article raises any questions, or if you have any employment related queries in general, please contact Ailsa Hobson on 0191 226 3705 or ailsa.hobson@sintons.co.uk.