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September 2010

Is Sleeping "Working"?

Consideration of the Minimum Wage Act

The Court of Appeal recently had cause to ponder the above question and came to the view that in the circumstances of the case, the employee concerned was working when on a "sleepover". As such, the employee was entitled to be paid the minimum wage for each hour "worked" on the sleepover.

Factual Background

The employer, Idea Services Limited, employed a Mr Dickson as a Community Service worker. In that role, Mr Dickson provided care and support for people with disabilities who lived in community homes. As part of that role, Mr Dickson was occasionally required to "sleepover" at the home. On sleepovers, Mr Dickson was required to stay at the community home overnight so that he could be on hand to deal with any issues that might arise during the course of the night.

Under his employment agreement, Mr Dickson was paid $34.00 per sleepover plus his ordinary hourly rate of $17.66 for any time that he was required to spend actively tending to the needs of the occupants of the home. If there were no incidents during the sleepover, Mr Dickson simply received the $34.00 sleepover payment, which worked out to $3.40 and $4.30 per hour depending on the length of the sleepover.

Mr Dickson filed proceedings in the Employment Relations Authority claiming that he was entitled to be paid the minimum hourly wage prescribed under the Minimum Wage Act 1983 (which at the time was $12.50 per hour) for each hour of the sleepover.

The Defences

Idea Services Limited attempted to defend Mr Dickson's claim primarily on two grounds. Firstly, it was argued that during the sleepovers Mr Dickson was not in fact working (and for significant periods of time was in fact sleeping). Accordingly there was no entitlement to pay him the minimum wage when he was not in fact working (except when he was attending to the needs of the occupants of the home during the night when he was paid his usual hourly rate of $17.66).

Secondly, Idea Services Limited argued that even if Mr Dickson could be regarded as working throughout the course of these sleepovers, the Minimum Wage Act was not breached if his average rate of pay over a pay period was less than the prescribed minimum. It was argued that if account was taken of what Mr Dickson was paid over his fortnightly pay period, divided by the number of hours that he worked (including hours spent on sleepovers), the resulting hourly rate exceeded the then minimum of $12.50 per hour. Both arguments were rejected by the Employment Relations Authority and the Employment Court. Idea Services Limited appealed to the Court of Appeal which resulted in that Court having to consider the two issues referred to above.

Was Mr Dickson "Working" When on Sleepover?

The Court of Appeal agreed with the Employment Court that the three factors considered by the Court of Appeal in determining this issue were helpful. They were:-

  • The constraints placed on the freedom the employee would have otherwise had to do as they pleased.
  • The nature and extent of responsibilities placed on the employee;
  • The benefit to the employer having the employee perform the role.

The Court of Appeal also noted the findings of fact made by the Employment Court to the effect that when Mr Dickson was engaged on a sleepover, there were significant restrictions on his activities whilst on a sleepover. In particular:-

  • He was unable to leave the group home during the period of the sleepover;
    Even though he was permitted to sleep, he must nevertheless be available to be woken to respond to any incident requiring attention;
  • He was not permitted to consume or be affected by alcohol or other drugs;
  • He was unable to have visitors;
  • He was unable to engage in any activity that might disturb the residents.

The Court of Appeal concluded that when these facts were taken in to account and considered in light of the three factors considered in determining the issue, Mr Dickson was "clearly working" when engaged on a sleepover. The Court of Appeal observed that if the outcome of the judgment was of concern to the Government, the solution was to amend the Minimum Wage Act. The Court also noted that the Minimum Wage Act was rather "simplistic" and premised upon the idea that employees would work 9 – 5, 5 days a week when that is in fact only the case for approximately 60% of today's workforce.

Could Idea Services Rely on Averaging?

Whilst the Court of Appeal raised the possibility that he might be able to be regarded as a "weekly worker" in the sense that he was paid by the week, the Court of Appeal concluded Mr Dickson was in fact paid by the hour.

Mr Dickson's argument was that for each hour of work, he was entitled to be paid the minimum wage, which as noted above was at the time $12.50 per hour, regardless of whether or not he received more than the minimum wage for other hours that he worked. The Court of Appeal held that this argument was consistent with the requirements of the Act. On the other hand, the Court of Appeal considered that Idea Services' argument that all that was required was that he be paid a minimum rate of $12.50 per hour on average over their particular pay period involved a strained interpretation. The Court of Appeal also observed that if the concept of averaging were intended to be permitted, it was surprising that there was no express reference to that possibility in the Act itself.

Conclusions

The decision potentially has significant implications in a number of sectors. Recognising the difficulties that the decisions of the Employment Relations Authority and the Employment Court had for Idea Services in terms of back pay, the Government placed Idea Services into statutory management. Whether or not the decision has wider implications for community care organisations remains to be seen but it seems apparent that such organisations may have to change the way in which community care is provided.

There has also been speculation that the decision could have implications extending beyond the community services industry to cater for situations such as school teachers on school camps who are arguably "on duty" 24 hours a day.

Whether or not the decision has such implications remains to be seen. It may be that the impact of the decision is lessened by legislative change.

In the meantime, all employers need to ensure that they remain compliant with the minimum wage legislation and any employers or employees having doubts about the position should contact us immediately.

P.S.

The Supreme Court has now granted leave to ISL to appeal. The appeal is likely to be heard later this year or early next year.