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Casual Employees

Newsletter issue - August 2016.

Some employers will be considering taking on extra staff on a 'casual' basis to cover the summer period. There are a few issues which employers should think about when taking on people on a temporary basis.

Firstly, the employment status of the worker needs to be carefully considered. The term 'casual worker' is not precisely defined in statute. It is often used to refer to individuals who are engaged on an 'as and when required' basis, and often, the intention is that the individual will not have employment status and all the legal rights which permanent employees enjoy.

Although the term 'casual worker' suggests an informal relationship between two parties, the law in this area is complex and employers need to be aware that a casual worker can be an employee with all the full legal rights which this entails, such as written particulars of employment, a broad range of 'family-friendly' rights, protection against unfair dismissal, and entitlement to statutory redundancy payment.

Essentially, for a contract of employment, three key elements must be present, namely:

• the employee must be under an obligation to perform the work personally;
• there must be 'mutuality of obligation' between the parties; and
• the employer must have sufficient rights of control over the employee.

The Tribunals are well aware that employers often try to avoid the existence of these key elements and so contract terms (written or verbal) are only the starting point. A wholes range of facts and circumstances need to be considered to determine the true employment status of a worker.

Casual workers can establish employment status via 'umbrella contracts'. This generally happens where an individual is engaged on a series of individual contracts, with breaks in between, but in reality there is an overarching contract (which may be implied) that continues even when the worker is not working (for example, during seasonal contracts).

However, at the end of the day, many workers are in fact casual workers, not employees. Nonetheless such workers still have important statutory rights. These include rights to paid annual leave, to the national minimum wage (see below), and protection against deductions from wages, whistleblowing and discrimination.

Casual worker contracts and working arrangements should be reviewed regularly. The employment status of a casual worker can change over time, as the working relationship evolves. The longer the working relationship, the greater the scope for contract terms no longer to reflect the reality of the situation, meaning they should be updated.

The entitlement of casual workers to paid annual leave should be monitored carefully. Misunderstandings and disputes around paid annual leave rights are a common source of disputes between employers and casual workers.

In addition, it is important to remember that casual workers will always have important legal rights, irrespective of their employment status. Although unfair dismissal protection only applies to employees, the status of casual workers may not be entirely clear, and with discrimination protection applying in any event, employers should always take care in termination situations.

HMRC provide a useful Employment Status Indicator, which employers can use to check the status of individuals, or groups of workers to see how they should be treated for tax and NICs.