Employers thinking of copying a flexible-working scheme pioneered by McDonald’s – whereby groups of people, such as family members or friends, are employed on a single contract and share a single job – may be wandering into a minefield of employment-related risks.
These ‘family contracts’, which allow husbands, wives, children and grandparents to job-share and swap shifts without notifying management in advance, are intended to tackle the problem of absenteeism.
Absenteeism is a curse of many businesses, not just retailers. Manufacturing and engineering businesses, even financial services companies which operate call centres, may find the McDonald’s scheme worthy of imitation. However, the potential risks of employing more than one worker on a single contract could be significantly greater than if one worker was employed to do the entire job.
A tribunal could rule that three separate family members on a single employment contract are in fact three separate employees, not a single employee, as the contract might suggest.
If three employees sharing an employment contract are ruled to be three separate employees, the employer’s liability is effectively trebled. Each family member could have individual rights as an employee, which would multiply the possibility of claims.
Employers considering copying the McDonald’s scheme ought to bear in mind the following issues:
Poor performance of one worker: If one or more of the workers does not perform satisfactorily and the employer terminates the contract, the others might claim unfair dismissal. It may be difficult for employers to discipline poorly performing workers without penalising the others, given they are all sharing the same contract. Employment is a personal service, and the concept of collective punishment is not recognised in law.
Allocation of shifts: Workers could dispute how shifts are allocated, giving rise to a situation where nobody turns up for work. Ultimately, who is liable for getting the job done? If the workers fail to agree who should work a certain shift, the employer might be in a quandary as to who should be disciplined for absenteeism.
Benefits: Each part-time worker might be entitled to the same benefits as a single full-time worker, despite perhaps only working occasional shifts. As a result, employer’s costs in relation to benefits could be higher than if one worker was employed to do the job.
Management: There may be instances in which one of the family members requires closer management or perhaps needs to be excluded from working with other employees.
It is worth noting that employment contracts, however carefully drafted, should reflect actual working practices. Even if an employer inserted a line in a contract explicitly stating that a worker is not an employee, a tribunal would be perfectly entitled to look at the working reality and rule otherwise.
In the case of these family contracts, the situation is far from clear. Families swapping shifts appear to have the right to substitute their labour, which is a key test of self-employment. However, there are many other tests of self-employment, such as whether the worker is controlled by a line manager, which may militate against these workers being classed as self-employed.
So employers hoping to use these contracts to reduce the risk of employment-related claims may achieve precisely the reverse.
A cure for absence?
At a time when many employers are reducing headcounts and using more temporary workers to lessen employment liabilities, employing three people where one would suffice is a surprising route for McDonald’s to tread.
Meanwhile, employers looking for solutions to their own absenteeism problem might want to wait until the courts have got to grips with these contracts before deciding to follow in McDonald’s footsteps.
By Richie Alder, partner, employment group, Trowers & Hamlins
David Fairhurst, vice-president of people at McDonald’s, explains how the scheme works in December’s Employers’ Law
Experts warn of hidden pitfalls in ‘family contracts’
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