Justin Govier (pictured), partner and head of the employment team at IBB Solicitors, examines the legal implications of employing workers on temporary or zero hours contracts.
Q. I am a retailer who, like many in my industry, has a huge spike in labour needs in November and December. What are my options?
The most common ways that an employer can deal with seasonal variations in labour needs include the following:
- Agency workers: the employment agency deals with the administration involved in fluctuating workforce needs. The agency is paid for these services, but it can be a cost- and time-effective solution.
- Traditional fixed-term contracts: these are not quite as flexible as the other options, but short-notice provisions are often inserted into the contracts.
- Zero hours contracts: the “employer” is under no obligation to offer work and (generally, although not always) the “employee” is under no obligation to accept any work offered. This provides both parties with greater flexibility.
- Increased overtime (including weekend work): the viability of this option depends on how much more labour is needed.
Q. There has been a lot of negative publicity surrounding the use of zero hours contracts. Are they even legal?
Many zero hours contracts do not give workers full employment rights. It is difficult to construe an employment relationship when neither party has to provide and/or undertake work. Seasonal working is a good example of when zero hours contracts can be used effectively. Fluctuations within the busy period mean that the employer may require the flexibility that only zero hours contracts provide (if recruiting direct). Recent bad press surrounding zero hours contracts relates mainly to large organisations using them for their core workforce. While not unlawful, there is a growing belief that having core workforces working zero hours contracts is an attempt to short-circuit employment rights legislation.
Business secretary Vince Cable has announced a consultation on the use of zero hours contracts, and it seems likely that legislation will follow.
Q. Who is going to sign a short-term fixed contract, when surely employees want security?
The look of a traditional workforce has changed over recent years. Structures are often less hierarchical and labour is often provided on a matrix or project basis. This allows employers to “buy in” expertise or volume when needed, rather than having resources underutilised for long periods of time.
The temporary nature of a fixed-term contract appeals to many, such as students, parents (who may not work at other times of the year) or people who treat seasonal work as a second income. Many people look for a financial boost around Christmas, but do not want to be locked into a longer-term permanent contract.
A fixed-term contract ensures that the employee will (and must) be available throughout the whole of the busy period and will be entitled to holiday pay. Despite its name, there should be notice provisions in the fixed-term contract in case the relationship needs to terminate early.
Q. I understand that there are now Regulations surrounding the use of agency workers. Why has this happened and what are the issues?
The Agency Workers Regulations 2010 are designed to give agency workers some of the same rights as permanent employees undertaking the same roles, because of concerns similar to the issues surrounding zero hours contracts. The law is intricate and complex. Employers must work very closely with agencies to ensure that the Regulations are complied with and, where they can, should obtain some indemnity from the employment agency that it will comply with the Regulations.
Q. These options appear almost draconian, when all I want is some flexibility to deal with the seasonal rise in demand that my organisation faces.
The more widespread use of fixed-term contracts, agency workers and zero hours contracts within permanent workforces has led to increased regulation and businesses complaining that the price they have to pay for flexibility is far too high, both financially and in terms of “red tape”.
It is important that employers find the solution that is appropriate for the organisation. If undertaken correctly, you will have a hard-working and motivated seasonal workforce in the run up to Christmas and may well want to make room for a few of the star performers in the New Year.
Justin Govier, partner and head of the employment team at IBB Solicitors
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