Employment Law solicitor Natalie Ruane provides an overview of seasonal contracts.
What can employers do when they have fluctuating needs for workers? Zero hours contracts have had a lot of bad press recently. Are there other options?
These types of contacts are often used if the work will be irregular or if the work is available for only a short period of time to cover a particular task that may or may not be required again in the future. The key feature of the arrangement is that there is no obligation on the business to provide ongoing work and there is no obligation on the individual to accept any work now or in the future.
These relationships are often informal and so generally aren’t covered by any paperwork at all but that can lead to problems if a dispute arises over what was required or agreed. Other than these “contractual” disputes, the main problem with casual work is that, notwithstanding the intended casual nature of the original arrangement, the individuals can become employees if the situation is not handled correctly.
Most commonly a regular pattern of work emerges. If the pattern is continuous, it becomes easy for the individual to show that they have become an employee because autonomy over work and hours (as well as the ability to refuse the job) is quickly lost. Even if there are breaks between periods of work, the more regular the pattern of work, the easier it becomes for a casual worker to be able to show an umbrella contract has been formed which joins separate periods of work together and which continues to exist during the periods when the individual is not working.
Maintaining the difference between casual worker and employees is often important. Employees have employment law rights. In particular, they accrue service and, over time, acquire the right not to be unfairly dismissed together with other benefits including the right to redundancy pay if the work for which they are engaged reduces.
Although many casual arrangements are seasonal in nature and therefore terminate naturally after a given period of time, those which run on indefinitely or which are repeated over a number of years can expose the business to greater risk than was originally intended.
The problem is that, although casual arrangements often start off with the best of intentions, unless casual workers are genuinely used for one-off, non repetitive tasks there is a risk of employment developing even in circumstances when neither party had that in their minds.
It is also important to remember that most casual workers who are not employees will still be workers as long as they provide personal services under a contract and the other party to the contract is not a client or customer of a profession or business carried on by the individual in question. Although workers don’t have as many rights as employees, they are still entitled to things like the National Minimum Wage and holiday pay.
The only way to avoid someone being a worker or an employee is to show that there is no mutuality of obligation. This requires the individual to have the ability to refuse to work but also the ability to send a substitute to carry out the work on their behalf amongst other things. If those two conditions are met the individual may not be a worker or an employee but including a substitution clause which can never be used in practice will not assist.
As an alternative to casual workers, some companies prefer to use fixed term contracts. That involves accepting that the individuals will be employees but tries to limit the length of the relationship.
Fixed Term Contracts
Fixed term contracts can end after a particular period of time, on completion of a particular task or on the occurrence or non-occurrence of a specific event. They can govern short periods or can be of a couple of years in length.
If the period of time is short, the hassle of putting the contracts together can put businesses off but the certainty of the nature of the relationship can be of real benefit.
However, the issue of how to bring a fixed term contract to an end is not necessarily as straightforward as just expecting the employee to leave at the end of the specified time period or after the task has been completed. Fixed term employees have the right to be treated no less favourably than permanent staff and have rights, amongst other things, to be told about permanent vacancies within the business. The end of a fixed term contract is also seen as a termination / dismissal and so needs to be handled sensitively.
The secret of dealing with all of these shorter / non permanent arrangements is taking care with the way in which the relationships come to an end. The best way to minimise risk is to follow a quasi dismissal process in each case. Never assume that just writing to the individual will be enough. Before doing anything, including deciding which, if any, of these types of contract is right for you, take advice.
Natalie Ruane at Burnetts will be happy to help. Contact her on firstname.lastname@example.org or on 01228 552222.
About the author
Natalie is a Partner and leads the Employment Law & HR team and specialises in education.