Easy come, easy go?

The use of casual workers is seen by some authorities as a solution to budget cuts and recruitment freezes, but the use of temporary staff is a lot less free-and-easy than some may think writes Abigail Trencher

In the wake of unprecedented public borrowing, the government will have little choice but to make savings and look to cut back on public spending. The public sector will need to control, if not reduce, all elements of expenditure, including employment costs. Public sector employers may impose recruitment freezes on permanent employees which may lead to an increased reliance on casual workers.   

Unfortunately for employers, the employment status of casual workers is far from certain.

Employee or not?

In law there are three categories of employment status: self-employed, worker and employee.

Self-employed workers are in business on their own account. There is no element of control over how they perform their services, they do not have to provide services personally and they can turn down work if they wish.   

Workers are required to perform their services personally under a contract, but otherwise they are under no obligation to accept work they are offered. Workers enjoy a lower level of employment rights and protections than employees although they are entitled to the national minimum wage and paid annual leave.

Employees work under a contract of employment. Such a contract will be deemed to exist where a range of factors are present but there are three factors that must be present for an individual to be an employee. These are:

• Personal service – the employee must be required to perform the services personally.
• Control – the employer must exert a level of control over how the services are performed.
• Mutuality of obligation – there must be an obligation on the employer to offer work and for the employee to accept it.

Employment during an engagement

A casual worker will usually be someone who works as and when they want to and as and when the employer needs them. They often work in industries where there are fluctuations in demand and are often used in the public sector, for example in healthcare and education where the need for services will vary with patient demands and student numbers.

Frequently, casual workers will be required to provide their services personally and the employer will exert control over how they perform their work. In such circumstances they are likely to be workers, if not employees.It was once assumed that a casual worker could not be an employee where there was no mutuality of obligation between the parties to offer and accept work at all times. This is no longer the case. This may prevent the casual worker being an employee during periods when they are not working for the employer, but may mean they are an employee during periods when they are working.

Where a casual worker accepts an engagement and during the course of that engagement there is an obligation on the worker to perform the services, then the worker is likely to be an employee during the time they are working. It will not matter that, when the engagement ends, there is no obligation on the employer to offer further work and for the employee to accept it.

Provided a specific engagement lasts for less than 12 months the casual worker will not accrue sufficient service to claim key employment rights. They will need 12 months’ continuous service to bring an ordinary claim of unfair dismissal and teo years’ continuous service to be entitled to a redundancy payment.  

Employment status during gaps between engagements

It is possible, however, for a casual worker to rely upon the gaps in periods of employment  to count towards their continuous employment in the following circumstances:

• Where there is an ‘umbrella’ or ‘global’ contract which spans both periods of work and gaps between those periods
• Where the gaps between periods of work are by reason of a temporary cessation of work
• Where there is an arrangement or custom.

Umbrella contracts

An umbrella contract will exist where, between periods of employment, there is an obligation on the employer to provide work and for the employee to accept it. In the case of St Ives Plymouth Ltd. v Haggerty, the Employment Appeals Tribunal “(EAT)” upheld a claim by Ms Haggerty that she had been continuously employed under an umbrella contract during periods when she was not working.

Mrs Haggerty was a casual worker who frequently worked for St Ives to cover fluctuating work flows. Mrs Haggerty accepted that St Ives was under no obligation to provide her with work during periods when she was not working and that she was under no obligation to accept work that was offered. However, in evidence it was accepted that the company valued its casual workers and, therefore, provided them with a reasonable amount of work to avoid them securing work elsewhere. Similarly, it was accepted that casual workers felt obligated to accept the majority of work offered to ensure they continued to be offered work. The EAT held that the Employment Tribunal had been entitled to find there was sufficient mutuality of obligation in the gaps when no work was performed to create an umbrella contract.

Temporary cessation of work

In the absence of an umbrella contract, a casual worker might argue that gaps between periods of employment do count because they are by reason of a temporary cessation of work. However, this requires a reduction in the work the employer needs to be performed, not simply that the employer chose to offer that work to someone else. This should help to defeat claims made by casual workers who perform work on an ad hoc basis. It will not assist employers, however, who engage casual workers continuously on successive engagements broken only by periods where business is quiet. For example, term-time lecturers who are offered no work over the summer holiday period.

Arrangement and custom

Despite there not being an umbrella contract or a temporary cessation of work, it is possible that a casual worker could argue they have continuity of employment where any gaps in work are governed by an arrangement or custom where they are regarded as being an employee. For this provision to apply there will need to be a clear commitment by the employer that future work will be offered at the end of the period of absence and a clear understanding that the employee will be regarded as being an employee during the period of absence. This is unlikely to apply to the majority of casual workers.

Helpful tips to avoid continuous employment

• Have clear contractual documentation between you and your casual workers which records that the parties acknowledge and agree that between each engagement there will be no obligation on the employer to offer work and no obligation on the worker to accept it.
• Ensure periods of engagement are kept as short as possible and are for no more than 12 months.
• Use different casual workers from time to time to avoid any gap in work being by reason of a temporary cessation of work but rather by reason of your choosing to give the work to some else.
• Do not give any commitment to provide work.

Abigail Trencher is an associate at Birketts.

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