Short Term Employment

How can I recession proof employment opportunities?

As the UK stumbles out of recession, increasing numbers of Clients are asking how to offer employment opportunities without entering into a long term commitment. The anxiety is that taking someone on permanently may be premature, resulting in equally rapid dismissal within a short period of time.  Here we examine some of the short-term options available along with some advantages and risks.

Employment for a Fixed Term

Fixed term employment may be suitable to deal with peaks in work, short-term projects and even maternity cover. Any contract that is agreed for a fixed term terminates automatically on the end date without being a breach of contract. When a fixed-term contract comes to an end and is not renewed, the employee is still dismissed, however. The dismissal will usually be fair providing the need for the contract has gone; the employee is notified of all available vacancies and the employer consults. But what if you keep them on?

Let’s say you employ someone initially for 6 months, renew the contract for a further 6 months and finally offer 12 more months. An employee could claim unfair dismissal (as they will have more than 1 year’s service) and probably redundancy pay (providing they have 2 years’ service). If you then dismiss, you need to demonstrate a fair process in ending the succession of fixed term contracts.

Advertise vacancies in a way that ensures all employees, including those that are fixed term, can see and apply for them. Meet with the employee several weeks before they finish to confirm that, this time, the contract will end on the agreed date. This all helps to fulfil your obligations.

Where a succession of fixed term contracts gives the employee 4 years continuous service, they are generally regarded by Employment Tribunals as a permanent employee and should be treated as one and consulted according to your normal redundancy process.

Conversely, you may be inclined to terminate the contract of a fixed term employee early to avoid putting your comparable permanent employees at risk of redundancy. Beware! This may be a breach of the principle of equal treatment for fixed term employees – in that the employees are being selected for dismissal simply because they’re on fixed term contracts. The Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations introduced in 2002 entitle fixed term employees to treatment no less favourable than your employees on permanent contracts.

And what if something completely unforeseen happens? For instance, a pregnant employee suffers a miscarriage and gives you notice to return to work just after you’ve employed her fixed-term replacement. Always flag the prospect that an unforeseen event may force you to terminate the fixed term early e.g. in the offer letter. Make sure you incorporate notice provisions in their principal statement of terms and conditions (which every employee must receive within 8 weeks of starting work). And don’t forget to consider any alternative employment that’s available.

Casual Employment

Perhaps fixed term employment is too definitive for your purposes. What about covering short-term sickness absence in a hotel or care home, for instance? Many Clients keep a register or database of people they call upon at limited notice when they need extra personnel for short duration engagements. There should be no regular pattern of employment and work will inevitably be short term e.g. to cover an unforeseen contingency or very irregular activity.

Examples of use might be catering staff covering occasional race meetings at a local race-course or nursing staff covering sickness at a care home. This arrangement is normally unsuitable for individuals working every week, to a regular pattern or for a definable period such as maternity leave cover or an evening shift behind a bar every Saturday. As with all employment situations, ensure the legal entitlement of such people to work in the UK first.

With such a scheme, the key issue is that no mutuality of obligation must be introduced into the relationship.  The Company is not obliged to provide work and, where work is offered, the individual is not obliged to accept it. This might mean you offer an individual work and they decline to accept it on this occasion.  This should not damage ongoing participation in the scheme; the Company simply offers the work to the next person on their list. Equally, the Company is under no obligation to offer work to a particular individual and, even if work is available, you can exercise reasonable discretion in allocating it.

If you employ someone a few times per year, for three or four years in succession, be aware that continuity of employment may be established. Keep periods of engagement as short as possible – we recommend never more than 12 weeks in succession. Always confirm in writing when the engagement starts and when it ceases on each occasion work is provided. Even following ground rules like this can’t guarantee that an Employment Tribunal will not view a succession of short term engagements as a period of continuing employment but you will at least protect yourself as far as possible.

Clients are understandably confused about the difference between casual and “zero” or “nil” hours contracts. Zero hour arrangements are, effectively, part-time contracts with no guarantee of a minimum number of hours of work. Whilst the employer does not undertake to provide any work and pays only for the work actually done, the employee undertakes to be available to work when called upon. One advantage, from the worker’s perspective, is they become your employee and start to clock up continuity of employment from the date the contract commences. Such an employee could claim unfair dismissal (after 1 year) and redundancy pay (after 2 years) even though they work only occasionally. We advise against using zero hours arrangements, if at all possible.

Agency Workers

Many Clients prefer to cover short-term peaks by engaging someone through an Agency. Indeed a number of our Clients are themselves very successful Employment Agencies. Although they do not come into effect until 1st October 2011, The Agency Workers Regulations (2010) prescribe standards of treatment for workers supplied by Temp Agencies to work under the direction and supervision of a “hirer” (effectively the end user).

This topic will be covered more extensively in a future edition but, in summary, means that basic working and employment conditions must be no less advantageous than they would be if the person was employed directly by the hirer. The provisions will operate when the worker is engaged in the same role for at least 12 continuous calendar weeks on one or more assignments. Continuity is likely to be preserved unless there is a break of six weeks or more during or between assignments in the same job. It may be broken by commencement of a new or substantively different role. Another significant provision for hirers will be the requirement to keep agency workers advised of their employment vacancies.

In the meantime, there can sometimes be confusion about who actually employs the agency worker. This has been particularly the case in long term assignments when familiarity with an individual can mean the end user’s local manager treats the agency temp as though they were their own staff. This can lead to claims that the agency temp has become an employee of the end user – undoubtedly not the situation that the hirer was expecting! Also problematic can be circumstances in which a worker initially engaged through an agency is subsequently taken on as an employee by the end user. In these circumstances it is more than possible that the initial period will count towards continuous employment allowing, for instance, a claim of unfair dismissal sooner than the new employer envisaged.

Self Employment

A genuinely self-employed person is an independent contractor and enjoys no statutory employment rights. There is sometimes a temptation to offer “freelance” “consultancy” or “self employed” opportunities rather than employ somebody. The question will be; are they genuinely self-employed? There is a significant risk that HMRC will scrutinise your arrangements and if they come to the conclusion that the self-employment is not genuine, you face penalties and an unwanted tax and national insurance bill. We can help by supplying a “test” document to highlight considerations to examine when identifying the employment status of an individual but are unable to offer advice on any tax/national insurance implications.