Calculating whether national minimum wage is paid

To calculate whether NMW or NLW is paid, the worker’s average hourly pay will need to be determined. To determine the average hourly pay, the worker's total amount of pay received over the pay reference period is divided by the total number of hours worked by the worker in the same pay reference period (see ‘Calculating pay’ and ‘Pay reference period’ below.)

Importantly, there is no requirement to pay the worker the NMW for each hour worked so long as the average hourly pay meets the NMW.

It is important to take into account all hours a worker works when calculating NMW. In the August 2021 Naming and Sharing, round 17, the following were identified as unpaid working times that took the pay below NMW:

• Work before and after the shift 
• Rounding clock-in time to the nearest hour
• Travel time 
• Issues with final pay where employment has ended
• A delay in pay, underpayments due to cashflow, cessation in trading or ad hoc payments
• Working more time than what paid for where 'regular' hours are used
• A salaried worker working in excess of their basic hours
• Mandatory training 
• Sleep-in shift when actually working 
• Overtime 

Sleep-in shifts

Previous case law indicated that sleeping time on the employer’s premises may well count as time worked. However, the Court of Appeal held in Royal Mencap Society v Tomlinson Blake that there is no entitlement to the National Minimum Wage for time spent asleep during a care worker’s sleep in shift. In making this ruling, the Court declared that previous binding case law which decided, for example, that NMW applied to sleeping hours in the situation where a worker would be disciplined if they left the workplace, was wrong.

In March 2021, the Supreme Court dismissed an appeal against this decision, upholding the previous findings of the Court of Appeal. In forming their decision, the Court held that National Minimum Wage law contained provisions in relation to 'sleep-in shifts' that, when applied to this case, meant the claim had to fail. However, they were clear that this only applied to shifts where it is 'expected' the worker will spend some time asleep. As this case can now not be appealed again, employers should proceed under this ruling.

As a result of the Tomlinson Blake ruling, the government updated their guidance on calculating the national minimum wage in April 2021. In particular, they outlined five key examples in which the findings of the Supreme Court might apply:

Example 1: worker spending time awake but woken only occasionally to perform tasks

A care worker is provided with sleeping facilities and expected to sleep most of the night, but is required to keep open a ‘listening ear’. They spend some of the shift awake reading a book in bed for pleasure while keeping a ‘listening ear’, although they would be permitted to sleep during that time if they preferred. They are not entitled to the minimum wage while they are awake and reading or while sleeping, as in both cases they are not awake for work purposes.

Example 2: worker taking calls on a nightshift

A worker answers very occasional telephone calls on a nightshift and is expected to sleep in a suitable bed for most of the night between calls. The worker is only eligible for the minimum wage for the time spent awake for the purpose of answering calls and performing any other duties.

Example 3 –worker permitted to nap during working shift

A security guard performing time work is permitted to take a nap in a chair between regular tasks. They are expected to be awake for the purpose of working for most of the shift, and so would likely be working and eligible for the minimum wage for the entire shift. In any event, on the basis that they have no suitable sleeping facilities, they would be eligible for the minimum wage for the entire shift.

Example 4: worker woken to deal with emergency but not required

A care worker who is expected to sleep most or all of a night shift is woken to provide back-up to another care worker in dealing with an emergency. They get dressed and sit near their fellow worker, but as it turns out they are not needed and are able to read the newspaper for an hour. They are still ‘awake for the purposes of working’ for that hour and so eligible to be paid minimum wage for that hour.

Example 5: worker woken frequently contrary to original expectation

A care worker is expected to sleep for most of the night. Initially the worker is woken only occasionally to attend to someone. Only the period for which the worker is actually awake for the purposes of working is included in the minimum wage calculation.

However, over time, the nature of the shifts change, and the worker becomes persistently woken so that in practice little sleep is possible. It could then no longer be said that they are expected to sleep for most or all of the shift, and the worker would likely cease to be a sleep-in worker. It is likely the worker would then be entitled to the minimum wage for the entire shift.