With 2.64 million people unemployed and graduates and young people among the worst affected, the Government has in place no fewer than nine schemes designed, as part of its Get Britain Working Campaign, to secure work experience or training for the unemployed.

In his autumn statement, the chancellor announced that the Government would be also be subsidising 160,000 jobs for 18-24-year-olds and increasing the number of work experience placements by 250,000 as part of its new 'Youth Contract'. We also know from our clients that employers are considering greater use of measures such as unpaid internships and zero hours contracts.

There is absolutely no doubt that pressure on businesses during these tough economic times means they need flexibility. There is less work around and employers either need fewer people or cannot offer the same amount of work as they could during more profitable times. As the good old-fashioned full-time contract of employment becomes as useful as a chocolate teapot to many employers, what types of arrangements may work for them and what are the potential pitfalls to avoid?

Zero hours contracts/casual workers

Zero hours contracts can be useful for managing peaks and troughs in business. The employer offers no guaranteed minimum number of working hours, the individual does not have to accept any work offered and the employer only pays for work actually done. Careful drafting is required to ensure that contractual arrangements are truly zero hours as obligations to provide or accept work may create an employment relationship. People working under zero hours contracts will generally be workers rather than employees and have fewer statutory rights.

Beware of statutory holiday entitlement – casual workers have the right to 28 days paid holiday per annum, pro rata. Calculating their entitlement can be difficult, as it will not be known in advance how long they will be engaged for and how many hours they will work – but in almost all cases, an employer is likely to be liable to pay some level of holiday pay.

Flexible working

Flexible working arrangements can benefit employers and employees alike. Many employers introduced flexible working arrangements, including reduced working weeks and sabbatical periods, in response to the economic downturn as a way of avoiding redundancies. Many employees also have the right to request to work flexibly, such as working part-time or from home, to care for a child or an adult relative and the Government proposes to extend this to all employees. Although employers do not have to agree requests, they do have a duty to consider them and can only refuse on certain business-related grounds.

Part-time working

Part-time working has become increasingly common but laws are in place which prevent employers using part-timers as a cheap pool of labour. Employers cannot discriminate against part-timers by treating them less favourably than full-timers, unless objectively justified. They will therefore generally be entitled to the same terms and conditions pro rata as full-timers, including pay, benefits, pension and holiday entitlement.

Unpaid work experience/internships

Unpaid work experience and internships, while once the preserve of the rich and well-connected, have become increasingly popular with employers as a way of saving labour costs. However, employers need to exercise care, because most interns are required to do work and will have worker rights, including the right to receive the National Minimum Wage (NMW), currently £6.08 per hour. The consequences of failing to pay the NMW are potentially serious; employers may be required to pay back pay for the whole period the intern worked for them and also be liable for a criminal penalty.

Listed below is an at-a-glance summary of some of the more important rights employees and workers enjoy. It is worth bearing in mind that if employers engage people, unless they are genuinely undertaking training or work experience, they are most likely to acquire many of the rights listed on our chart.

Top Tips on potentially making it work

• Draft agreements carefully – if in doubt, take legal advice
• Identify employment status and familiarise yourself with the rights associated with being a worker and employee (see table above)
• Beware of getting into a pattern of regularly offering casual workers work, as this could give rise to an employment relationship
• If introducing flexible working schemes, remember this may involve changing terms and conditions of employment, so tread carefully and take legal advice
• Consider any flexible working requests properly in accordance with statutory requirements
• Ensure part-time workers are provided with the same terms and conditions pro rata as full-timers, unless the difference can be objectively justified
• Pay interns the NMW unless they are work shadowing rather than working, in which case there may be scope for arguing they are not entitled
• Investigate the availability of government job subsidies under the Youth Contract and ways your business can help the long-term unemployed through the government's Get Britain Working initiative.

Jennifer Nicol (pictured) is a partner in the London City office of employment law firm, Doyle Clayton Solicitors