Worker or employee?
The first thing to consider is whether additional staff will be employees or workers. This is a tricky question that has been much-debated in the press recently and is important to address at the outset. Whether a member of staff is a worker or an employee is essentially a matter of fact, although what is written in the contract will be relevant to a degree. Workers have far fewer rights than employees, although both are covered by the right to the national minimum wage, holiday pay, working time requirements and protection against discrimination. But although recruiting additional workers may seem attractive, workers do not have the same 'mutuality of obligation' as employees. For example, they do not have to work when requested and are not generally subject to the same degree of control. Therefore, this may not work for employers recruiting additional staff for the busy Christmas period.
Protection from less favourable treatment
If staff are taken on as fixed-term employees they will be protected under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002. These give fixed-term employees the right not to be treated less favourably than comparable permanent employees, although they do not apply to fixed-term workers or agency workers.
For example, if permanent employees are given a Christmas bonus based on performance or paid time off on public holidays, these provisions will need to be extended to fixed-term employees. If a Christmas bonus is based on permanent employees' performance that year, fixed-term employees will have the right to receive the same bonus pro-rated according to how many months they have worked that year. They also have the right to be informed of any permanent vacancies.
However, a difference in treatment will not be unlawful if the employer can show objective justification for the treatment. For example, not granting paid time off on public holidays may be objectively justified if the fixed-term employees have been recruited specifically for covering absence over public holidays. But employers should look to offer a package of terms that is equivalent.
Terminating fixed-term contracts
Employers should also consider how the employment relationship will end. If a contract is terminated prior to its expiry this may amount to a wrongful dismissal, so it would be advisable to insert provisions whereby the employer can terminate the contract early by giving notice.
Expiry of a fixed-term contract will still amount to a dismissal. The reason for dismissal will usually be redundancy or 'some other substantial reason' and a fair process must be followed.
If a fixed-term contract is not terminated correctly and an employee has two years' continuous service this could mean that they could bring an unfair dismissal claim and may also be eligible to receive statutory redundancy pay. Continuous service can accrue from back-to-back fixed-term contracts but can even accrue if an employer is employing the same people each Christmas season and there is an expectation of work each year. It is therefore important for contracts to state the length of the work, whether the employer believes they have accrued continuous service from previous contracts, and that there is no guarantee of employment in future seasons.
Employers should also be aware that fixed-term employees who have been employed on successive contracts continuously for four years or more may be deemed a permanent employee.
Charlotte Marshall is a solicitor in the employment law team at Blake Morgan
