Clarify employee contracts & avoid a nasty New Year surprise

The festive season is nigh, as are issues with staffing, holiday requests and increasing employee demands.

The pressures of Christmas means forward thinking is needed to ensure businesses have adequate resource. With this sudden demand, businesses will look to hire temporary workers such as agency staff, casual workers or self-employed contractors.

The flexibility of self-employed working arrangements can be attractive to both businesses and the individuals; however, their contractual terms have come under significant scrutiny in recent months, with the recent Uber case delcaring that two drivers should be classifed as workers, not self-employed contractors.

The ruling has acted as a catalyst for further examination of businesses using self-employed contractors.

According to Philip Pepper, Employment Law Partner at Shakespeare Martinea, it’s important employers are aware of the potential risks associated with hiring casual workers or self-employed contractors to help manage peaks in demands at key times of year.

He explains: “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 which leads to misunderstandings. However, the onus is on businesses to do their homework to distinguish between the various categories and ensure that they comply with the varying degree of employment rights. Getting this wrong could have serious legal consequences.

“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.

“Businesses should ensure this is well documented, by setting out clear agreement 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 as a self-employed contractor.

“This agreement should outline obligations on both sides and detail the regularity of work patterns. The documentation, working practices and length of the engagement should also be revisited and assessed regularly."

Pepper's ways in which firms can encourage individuals to be employees rather than self employed contractors, continued:

• 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 issues, small businesses are more likely to face disputes of this type as they often lack resource and a dedicated HR department.  

“It’s vital that companies avoid getting caught up in the Christmas rush and put the necessary measures in place to manage 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.

“By taking this diligent approach, employers can still fulfill customer demand this festive season, and hopefully avoid any nasty legal surprises come the new year.”