There has been a significant growth in the ‘gig economy’ and the hiring of casual workers in recent years. However, the term ‘casual worker’ does not have a specific definition in law and can be used broadly to include individuals working in different sectors in a flexible, ad hoc way which may be employees, workers or self-employed contractors. So, what are casual workers, how can they be beneficial to your business and what are some of the pitfalls to be aware of when hiring casual workers?
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What is a casual worker?
Whilst there is no clear definition of what a casual worker is in law, it is likely that it will include your business providing work on an ad hoc basis to an individual, who can work on a flexible basis as and when the business requires them.
It is important that you and the individual you hire are clear about what you mean when you refer to them as a casual worker and what the true nature of the working relationship is. What you label the relationship as is not vital, it is the reality that is critical when looking at what rights and responsibilities are associated with the employment.
When considering whether a casual worker is actually a worker entitled to some employment rights (albeit not as many as an employee) it will be considered whether:
- there is a contract between you and the individual;
- the individual has to provide their service personally? Or is there a right to substitution?;
- you are a customer of any business carried on by the individual; and
- there is an obligation on you to provide work and an obligation on the individual to accept work.
It is important that you don’t presume that because you have sought initial legal advice or researched and concluded that a casual worker is in fact a worker, that they will remain a worker. You will need to make sure that you are assessing whether the reality of the working relationship has changed over time. It may be that after a while a worker starts working a regular pattern of days and hours or can establish that they are employed under an umbrella contract. It may also be the case that a casual worker starts working for you as a self-employed contractor and acquires worker status as the relationship progresses.
Recently there have been a number of high-profile cases where employers have been caught out and casual workers have been able to assert that they have additional employment rights either as a worker or as an employee. If you are unsure about the employment status of your casual worker and whether they are self-employed, a worker or an employee our article here may help. For advice on your specific situation, our employment lawyers can assist.
Why might my business benefit from employing a casual worker?
You may look to hire a casual worker to enhance flexibility in your workforce, if the need for workers is not constant in a certain area. If your business has seasonal fluctuations, hiring a casual worker could operate as a temporary overflow facility without the liability and expense of employing employees on a permanent basis.
The additional flexibility afforded by hiring a casual worker means that you can deploy individuals at short notice into those areas of your business which may require further support, without disrupting other areas of your business.
What type of contract will I need for a casual worker?
This will depend on the reality of the employment relationship. If your casual worker is actually an employee just with flexible days and hours, you will need an employment contract for this purpose. If they are self-employed, you will need a contract for services to be drafted and if they are in fact a worker, a casual worker contract is sufficient. ‘Casual worker’ could include those on a zero-hours contract with no minimum guaranteed hours, those on short hour guaranteed contracts and those on a short-term or fixed contract for a certain duration or project amongst others and these will all need different specific clauses to reflect what is being agreed between your business and the individual working for it. Our employment lawyers can talk through the specifics of who you are looking to hire and how you would like for them to operate in order that the correct contract is drafted for your business.
Issues with engaging casual workers
Whilst hiring casual workers might be the solution your business is looking for; this is not always problem-free. There are some issues that you should be aware of, such as:
Arranging work – can be complicated as casual work is ad hoc and variable. You might find it difficult to contact the worker. Whilst you could try to put a system in place to ensure that work can easily be arranged, any formality might suggest that the worker is no longer working on a casual basis.
Written statement of terms – prior to 6 April 2020 only employees were entitled to receive a written contract or statement of terms, but on and from that date workers are also entitled to this. This is more of an administrative burden for employers but also needs to be the appropriate contract for the situation and ensure the employment rights workers are entitled to, such as entitlement to the National Minimum Wage, lawful rest breaks, annual leave and limits on a week’s work. Our employment lawyers can assist with this.
Itemised payslips – since 6 April 2019 all workers have been required to have been provided with itemised payslips.
Holiday hours and pay - calculating the correct holiday hours and pay for a worker with no normal working hours can be complicated.
It was decided recently by the Supreme Court that it was incorrect to work out a pro rata entitlement, as under the WTR 1998 holiday accrues throughout the contract, even when no work is done. However, the government has launched a consultation and proposed a pro rata entitlement based on work done over a 52-week reference period to address the imbalance where at present part-year workers are now entitled to a larger holiday entitlement than part-time workers who work the same total number of hours across the year.
Holiday pay is calculated based on a worker’s average weekly pay in the 52 weeks before their holiday starts (excluding weeks where no pay was due). If the worker’s pay includes variable but guaranteed overtime and commission, these will have to be included when calculating holiday pay.
Pensions and benefits - all UK employers must automatically enrol eligible workers in a pension scheme and pay mandatory minimum contributions. Eligibility requirements are complex, and specialist advice should be sought in the specific circumstances about whether casual workers are entitled to particular benefits.
Sick pay - There is no statutory right for a worker to receive full pay for time spent off work whilst sick, but you may choose to include this in a worker's contract. There may also be an implied right to be paid while off sick if you routinely make such payments to workers. If you have made a payment before you must be careful about how you exercise discretion so that you are not vulnerable to claims of discrimination.
To be eligible for SSP, the definition of employee is wider than that under the ERA 1996, and includes all those whose earnings are liable for Class 1 NICs, so a casual worker could qualify for SSP.
Family friendly rights- whilst only employees are generally entitled to family-friendly rights, again, the definitions of ‘employee’ for the purposes of some of these rights are wider than the standard definition in the ERA 1996 so a casual worker may be entitled to some family-friendly rights.
Tax - unless the casual worker is genuinely self-employed, according to tax and not employment rules, they need to be taxed in the same way as an employee.
There can be differences in the determination by HMRC as to the status of individuals for tax purposes and their employment status under employment law and so assumptions should not be made about employment status based on this. If you are in doubt, to avoid significant liability at a later stage for not having deducted tax and NICs as required through PAYE, it is advisable to seek legal advice at an early stage and whenever you are in doubt about a casual worker’s employment status, during the working relationship. If a casual worker is to work on a self-employed basis, it should be made clear how and when invoices will be raised by the worker.
Discrimination - the definition of employment under the Equality Act 2010 including workers and employees and could even include a self-employed contractor who provides personal service. It is critical on this basis that you consider how your business offers work appointments, as there is a risk of a discrimination complaint if the casual worker feels that they have been treated less favourably than comparable workers if they are being offered more work.
More women, young people and part-timers are casual workers working under zero hours contracts and so there are risks of indirect sex and age discrimination claims. Providing workers with a staff handbook and giving them the same opportunities to raise grievances as employees can assist in reducing these risks and having an awareness of them from an early stage.
TUPE – again, the definition of ‘employee’ is wider under the TUPE Regulations than generally under employment law and specifically states that contractors would not be included, but if under a contract of employment, an apprentice or ‘otherwise’ and employed by the transferor and assigned to the organised grouping of resources or employees that is subject to the relevant transfer, which would otherwise be terminated by the transfer will transfer under TUPE. Seeking expert advice on any potential TUPE transfer at an early stage, is advisable.
Exclusivity clauses – are often found in employment contracts and restrict individuals from working with other employers during their employment. Exclusivity clauses are banned in zero hours contracts and in the contracts of low-income workers in order that they can seek additional work elsewhere when they are not offered sufficient hours by their employer.
Summary
If you are looking to hire a casual worker it is worth giving due consideration in advance to the way you want the working relationship to operate and whether hiring an employee, worker or self- employed contractor will work best, after reviewing the different impacts for your business. There are some complications involved in hiring casual workers, and so if you do want extra support in drafting documentation, assessing employment status or asking about the rights and responsibilities associated with hiring a particular casual worker, please do get in contact with our expert employment solicitors.
