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Mishaps

Published: 02 December 2016
Area of Law: Employment

How to avoid contractual mishaps this Christmas

The only thing giving employers a headache this Christmas should be mulled wine, not employment contracts

We are fast approaching the festive busy season and one of the key challenges that business owners face is staffing. Holiday requests and increasing employee demands for flexible working often make resourcing difficult  and forward-thinking management teams should already be planning ahead to fill any employment gaps.

Staffing options for businesses to consider over the Christmas period are vast. Typically, many employers take on more temporary workers such as agency staff, employ casual workers or 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 but employing them doesn’t come without its challenges.

By taking a diligent approach, employers can still fulfill customer demand this festive season, and hopefully avoid any nasty legal surprises come the New Year.

The benefits...

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 during peak business periods.

The challenge…

It is 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. In some instances, this is leading to misunderstandings and workplace disputes. Unfortunately, getting it wrong could have serious legal consequences and give business owners and workers alike an unhappy New Year.

Who takes responsibility?

The onus is on businesses to do their homework so they can distinguish between the various employment categories and ensure that they comply with the varying degree of employment rights each may have.

Which contracts are most risky?

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. Avoiding using them all together isn’t necessarily the answer.

What causes the problems?

When questioning the true nature of the relationship, an Employment Tribunal will consider a wide variety of factors, these include:

•The ‘mutuality of obligation’ that may exist between the parties – this means checking whether there is any obligation on the business to provide work and whether the individual is obligated to accept it.
•Identifying the controlling party – this looks at who has control in the relationship and what happens in reality by looking at the current and historical methods of working.

What can employers do to ensure a stress free Christmas?

Documentation: is crucial. 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. Crucially, this agreement should outline obligations on both sides and include details of the regularity of work patterns.

Reviewing continually: is a must. 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 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 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 issues, smaller businesses are more likely to face 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.

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