The term ‘casual worker’ has no legal definition and is used to describe individuals who do not work a fixed number of hours each week and with no guarantee they will be given future work. Casual workers are often appointed on an ‘as required’ basis with businesses who have varying demand for ad hoc casual work.
What is the difference between a worker and an employee?
Employment rights are determined by employment status and different rights are afforded to different employment status categories. Many employment rights are only available to employees, as opposed to workers or self-employed individuals. It is important to identify the employment status of individuals.
Section 230 of the Employment Rights Act (ERA) 1996 defines an “employee” as:
“An individual who has entered into or works under (whether employment has ceased, worked under) a contract of employment”.
A contract of employment is defined as:
“A contract of service or apprenticeship, whether express or implied, and (if it is express), whether oral or in writing”.
Defining a casual worker can be difficult, but the term normally applies to work which occurs:
- once or for a short period of time;
- often but on an irregular and unpredictable basis; or
- where there is no obligation for the employer to offer work and no obligation for the individual to accept it.
Although a written statement of particulars of employment/employment agreement and the intentions of the parties may be persuasive to show the parties intend to create a relationship of employee and employer, it is not entirely determinative as an employment tribunal will look beyond the agreement and label given by the parties and consider the working arrangements and working relationship as a whole. Tribunals conduct a number of tests to assess whether an individual can be considered an employee and may include:
- Whether the individual must complete the work themselves or whether they can send a substitute;
- Whether the individual has any responsibility for hiring additional staff to help perform duties;
- Whether the individual is paid via PAYE and makes National Insurance contributions through the employer’s payroll;
- Whether the individual is registered for VAT;
- Whether the individual uses his/her own tools or equipment;
- Whether the individual is required to take out and maintain professional indemnity insurance;
- Whether the individual is entitled to contractual benefits such as sick pay; and
- Whether the individual is subject to the organisation’s disciplinary procedures.
What is mutuality of obligation?
One test that can be used to determine whether a worker is an employee or not, is the test of whether there is mutuality of obligation between the organisation and worker. A contract of employment cannot exist unless there is an obligation for the organisation to provide work and for the individual to perform the work. The factors to consider when assessing whether there is mutuality of obligation and if an employment relationship exists may include:
- Whether the worker can appoint a substitute;
- Whether the individual is working for multiple organisations;
- Whether there is a notice period in the agreement;
- Whether there is regular and consistent working hours; and
- The duration of time the individual has worked for the organisation.
Therefore for the individual to be considered a casual worker, the organisation must not be under any obligation to provide work and the individual must be free to refuse any offer of work without facing disciplinary action or being restricted from future work opportunities.
What types of casual agreements are there?
What type of contract the worker has is an important factor and the worker contract will vary depending on what the company requires the worker for, whether it be a single assignment of casual work for one month or casual work ad hoc.
Single Assignment Agreement
This agreement is used where the worker is offered work on a one off basis, where the start date and end date is usually agreed before the work commences. The worker may be considered an employee for the duration of the assignment, however it is generally accepted there would not be continuous employment between the contracts.
A zero hour contract is one in which the zero hour worker undertakes work on a regular basis without a minimum amount of work hours being guaranteed. A zero hour contract may be drafted in the following ways:
- A contract under which the worker has to work when the company demands;
- A contract under which the worker has to come into work subject to notice being given, but is otherwise not obliged to work; or
- A contract arrangement under which the worker is free to accept or reject an offer of work.
In a nutshell a zero hour contract (sometimes referred to as a worker contract) is often considered a one sided agreement in which the company can decide how much work to offer the worker depending on business needs and can also require the worker to be available upon notice.
Casual Worker Agreement
Under a casual worker agreement you are not obliged to offer any work to the worker and there is no obligation for the worker to accept the work offered. No mutuality of obligation arises and as such the worker is less likely to have the status of an employee.
However it is important to remember that an Employment Tribunal will look beyond the label of the relationship and instead will review what happens day to day in deciding whether the worker is an employee or not.
What does a casual worker agreement include?
A casual worker agreement can be used where there is no guarantee the business will offer any work and where the worker is generally not expected to accept any work offered. The intention behind the agreement is that the individual will be a worker rather than an employee or self-employed.
- Details of the worker’s place of work must be included in the agreement.
- The status of the agreement is included to highlight that no employment rights are conferred by virtue of the agreement, to ensure there is no mutuality of obligation and the company does not have to provide work and the worker does not have to accept the work.
- The agreement may include that there is no presumption of continuity and that each engagement is separate and severable. This ensures no relationship between employer and employee will arise, however as noted above an employment tribunal will look at the nature of the relationship and not the label.
- Whether a probationary period will apply to the engagement in order to assess suitability for the role, including details of how long the probationary period is, whether a notice period applies and if the probationary period can be extended.
- How much notice will be given by the company when offering the worker an engagement, specifying the worker is under no obligation to accept an offer of work. You may also include details of the duties the worker will be expected to perform.
- Details of the hours of work the worker may be required to work should be included, for example this could include the exact hours or alternatively it can include a time frame under which the worker may be expected to attend work in addition to the location of work.
- It is important to include details of how the workers pay is calculated whether it is per hour or based on a deliverable and whether it meets national minimum wage requirements.
- In accordance with the Good Work Plan workers should be provided with all details of remuneration and not just pay, which includes benefits which may confer some kind of economic value. Where benefits are not provided this must be explicitly stated.
- As it is unknown how long the worker will be engaged for, the workers holiday entitlement and holiday pay will be the pro rata equivalent of a full time worker’s annual leave eligibility (as per the Working Time Regulations 1998, full-time workers have the right to a minimum of 5.6 weeks’ paid holiday each year). Details of how holidays must be requested should be included in the agreement alongside the company’s holiday period (i.e January to December).
- Worker’s should be provided with details of how to report a sickness absence and what their qualifying days are for the purposes of Statutory Sick Pay (SSP).
- If the worker is required to complete a period of training, details of this must be included in the agreement, alternatively where there is no training this must be explicitly stated in the agreement.
- To protect your company and data, it is important to include a data protection clause to provide the worker with details of how they are required to to comply with Data Protection Legislation and how their personal data may be used. If the company has a policy, details of the policy must be included alongside where the worker can find the policy.
- This rule applies to all company rules and procedures, the worker should be provided with details of how to find the company’s rules, policies and procedures for example the disciplinary and grievance procedure.
- All businesses have confidential information which must be protected, including details of what is confidential information and what is required of the worker in order to protect the confidential information will ensure the interests of your business are protected.
- Where a company is likely to generate IP, including an IP clause will ensure there is no ambiguity around who owns the IP.
- Although there is no mutuality of obligation between the worker and company, wording can be included in the instance the worker does not want to be considered for work, the worker must notify the company.
- If the worker is entitled to be enrolled onto the pension scheme, details of this must be included in the agreement. Where the worker is not eligible, this must also be explicitly stated.
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The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.