The Court of Appeal has reversed an Employment Tribunal judgment which could have cost the care sector £400m in back pay to staff.

The ruling relates to social care workers who had been paid a flat rate for shifts where they slept in a patient’s house or at a care home to provide support if necessary, known as “sleep-in shifts”.

Mencap and Care England – the representative body for social care providers – went to the Court of Appeal in March to challenge an Employment Tribunal ruling, made in 2016 and upheld at appeal last year.

The tribunal rulings, in favour of a sleep-in shift worker, Clare Tomlinson-Blake, found Mencap should have paid her the full minimum wage during sleep-in shifts. The ruling would potentially have led to care providers having to pay back pay and penalties to large numbers of staff, which it was estimated would cost the sector £400m and result in some organisations being forced into liquidation. The Court of Appeal has concluded that this ruling should not stand.

Professor Martin Green OBE, Chief Executive of Care England says:

“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.”

Derek Lewis, chair of Mencap, said: “The court’s decision has removed the uncertainty about how the law on the National Living Wage applies to sleep-ins.  The prospect of having to make large unfunded back payments had threatened to bankrupt many providers, jeopardising the care of vulnerable people and the employment of their carers.”

He added that the charity had brought the case because of the “mayhem” that would have been caused otherwise.  “Many hardworking care workers were given false expectations of an entitlement to back pay and they must be feeling very disappointed,” he said. “We did not want to bring this case. We had to do so because of the mayhem throughout the sector that would have been caused by previous court decisions and government enforcement action, including serious damage to Mencap’s work in supporting people with learning disabilities.”  He said that “care workers deserve a better deal” and should not be among the lowest paid sectors. He said Mencap would continue to pay workers at a higher rate for sleep-in shifts but that government should legislate to make this compulsory and ensure it is funded.  “We also call on government to ensure that the social care sector and, in particular, the specialised support that is required for people with a learning disability is properly funded and its workers are paid what they deserve in the future,” he said.