The recent case of Smith v Oxfordshire Learning Disability NHS Trust has provided some clarification on the legal situation regarding allowances and the National Minimum Wage (NMW) Regulations.
Where allowances are not consolidated into basic pay, they are not to be included in NMW calculations. This could include allowances for:
- Being on-call.
- Working unsocial hours.
- Performing special duties.
The case in question concerned Mr Smith, a care worker in a residential care home for adults with learning disabilities. He worked at the home for 15 hours a week, and was sometimes required to sleep there, for which he received £25 for a nine-and-a-quarter hour period.
His claim alleged that he was being paid less than the NMW for his work at the home. For the fifteen hours he worked, his pay rate was £7.94 - well above the NMW. However, he argued that if the nine hour sleeping period was added on to his 15 hours, his average pay rate dropped beneath NMW levels. He also claimed that the £25 sleep payment was an allowance, so could not be included in the NMW calculation.
The care home asserted that the £25 was not an allowance, and, when it was included to Mr Smith's standard wage, it brought his pay level over that of the NMW.
To be classed as an allowance under NMW regulations, a payment must be "attributable to a particular aspect of the worker's working arrangements or to his working or personal circumstances."
To put the payment in context, the Employment Appeal Tribunal (EAT) looked at some of the other payments that were made to Mr Smith and his colleagues. Examples of these included special payments if a worker was disturbed during the night and an unsocial hours "enhancement" that was paid for any hours worked immediately before and after a sleeping period.
The EAT found that these payments were good examples of allowances, as they were given to employees who had in some way had to work over and above their normal duties. The fact that Mr Smith had to sleep at the home, however, was simply part of his basic job, and so the £25 payment could not be considered an allowance.
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