As we approach the busy festive season, one of the key issues facing business owners is staffing. Holiday requests and increasing employee demands for flexible working are making it difficult for smaller businesses to ensure they have adequate resource. Forward thinking management teams are already planning ahead to fill any employment gaps.
There are a number of staffing options for businesses to consider over the Christmas period. For example, they could take on more temporary workers such as agency staff, employ casual workers or they could hire self-employed contractors to lend a hand. Both casual and self-employed contractors are a popular choice for businesses at this time of year.
The flexibility of self-employed working arrangements can be attractive to both businesses and the individuals concerned as they have the flexibility and freedom to choose their own working arrangements, and businesses are able to secure a bank of ‘on-call’ individuals to utilise as and when needed. However, the contractual terms of their engagement have come under significant scrutiny in recent months, with high-profile businesses like Uber and Deliveroo facing criticism for allegedly treating these individuals unfairly.
Dispute over working rights
Following an investigation into Uber’s pay and employment practices, the taxi app business lost a tribunal claim over its drivers’ working rights last month (October 2016). It was found that the firm was wrong to classify two of its drivers as self-employed contractors as their contracts placed too much demand on them to work at particular times, indicating that they should be treated as ‘workers’ and have the rights attributed to ‘workers’ such as minimum wage, holidays and rest breaks.
The ruling has acted as a catalyst for further examination of businesses using self-employed contractors and a group of couriers working for Deliveroo have recently announced their intention to take legal action to gain union recognition and workers’ rights.
As cases like this become more common, it’s increasingly important that employers are aware of the potential risks associated with engaging casual workers or self-employed contractors to help manage peaks in demands at key times of year.
Business owners sometimes complain that there is a lack of clarity and guidance about how to recognise the different categories in engaging individuals to undertake work and, in some instances, this is leading to misunderstandings and workplace disputes. However, the onus is on businesses to do their homework so they can distinguish between the various categories and ensure that they comply with the varying degree of employment rights each may have. Getting this wrong could have serious legal consequences and give business owners and workers alike an unhappy New Year.
The risk of misunderstandings arising is greatest when hiring flexible workers and self-employed contractors. Businesses need to manage these relationships with care to protect themselves from potential disputes.
When questioning the true nature of the relationship, an employment tribunal will consider a wide variety of factors including the ‘mutuality of obligation’ that may exist between the parties. They will consider whether there is any obligation on the business to provide work and whether the individual is obligated to accept it. They will also look at who has control in the relationship and what happens in reality by looking at the current and historical methods of working.
Establish the terms clearly
To make sure this is well documented, businesses should ensure there is a clear agreement in place setting out the terms at the very start of the engagement, regardless of whether or not they are being hired as a casual worker on a zero hour contract or are self-employed contractors. This agreement should outline obligations on both sides and, crucially, should detail the regularity of work patterns.
The documentation, working practices and length of the engagement should also be revisited and assessed regularly. For instance, if a self-employed contractor is called upon more and more to the extent that all they do is work for one business (having done so for a prolonged period) and they undertake identical or similar duties to existing employees, then this should set off an alarm bell and be reviewed to avoid staffing issues arising later.
Other ways businesses could unwittingly alter an individual’s status to become workers or employees are:
- Offering to put salary through the company payroll every month and deduct appropriate tax to reduce admin
- Requesting the individual provides a doctor’s note if they are off sick and submits approval forms for holidays
- Offering them overtime pay, bonus payment or other benefits normally given to employees in an effort to motivate and retain them
- Applying the company’s own disciplinary and other policies and procedures to the individual
- Encouraging the individual to stop providing work for other employers and instead work solely for their business
While all companies need to be aware of these staffing issues, small businesses are more likely to face staffing disputes of this type as they often lack resource and a dedicated HR department. In these situations, subtle shifts in employer/employee relationships can be easily missed.
It’s vital that companies avoid getting caught up in the Christmas rush and put the necessary measures in place to manage employment-related risks now. This includes setting out a clear agreement with each individual from the outset, regularly reviewing the relationship and keeping processes and documentation up to date at all times.
By taking this diligent approach, employers can still fulfil customer demand this festive season, and hopefully avoid any nasty legal surprises come the New Year.
Philip Pepper is an employment law partner at Shakespeare Martineau.