A casual affair

16 July 2007

When relationships end badly, one side is normally left feeling aggrieved and, in the case of an employment relationship, this can lead to an unfair dismissal claim. But surely relief workers engaged “as and when” have no right to complain; after all it’s only a casual relationship. Or is it?

In order to qualify for many statutory rights (such as unfair dismissal and statutory redundancy payments), an individual must be an employee and have acquired a minimum period of continuous employment. Generally speaking, casual workers engaged on zero hours contracts will have employment status during the periods when they are actually performing work for the employer. Therefore, the question with casual workers is whether they are employed on a series of discrete short contracts or under a global or umbrella contract, which provides a continuing employment relationship between assignments.

Zero hours contracts do not normally constitute an ongoing employment relationship of employment where they expressly state that the company has no obligation to provide work or for the worker to undertake the work when requested. The absence of any mutually of obligation means that an over arching contract of employment can not exist. Consequently, continuous service is broken after each assignment, unless it is preserved under the provisions in the Employment Rights Act 1996 (ERA).

Casual workers can establish that they have a period of continuous employment by relying on the ERA to bridge the gaps between the periods of work. Section 212(1) provides that, if the employee works for any part of a week, then the entire week should count when calculating their period of continuous employment. Further more, continuity of employment will be preserved during a gap where no contract of employment exists if the employee is:

Incapable of work in consequence of sickness or injury (section 212(3)(a)).
Absent from work on account of a temporary cessation of work (section 212(3)(b)).
Absent from work in circumstances such that, by arrangement or custom, they are regarded as continuing in the employment of the employer for any purpose (section 212(3)(c)).

The Court of Appeal in Cornwall County Council v Prater (2006) held that a home tutor worked under a series of successive assignments, each of which constituted a contract of employment. As there was no mutuality of obligation, a contract of employment did not exist between assignments but the tribunal had been correct to consider the provisions under ERA and to treat the gaps as “a temporary cessation of work”. This decision is significant for casual workers who might have otherwise found it difficult to establish a single umbrella employment contract. Provided that there is sufficient mutuality during an assignment to constitute a contract of employment, a lack of mutuality in between assignments is no bar to the tribunal treating the "downtime" as a temporary cessation of work thereby preserving continuity.

Following the decision of the EAT in Vernon v Event Management Catering Ltd (2007) it is also now possible that casual workers could preserve continuity by taking a day's holiday in any week during which they are not given work. The tribunal originally struck out the casual worker’s claim of unfair dismissal on the basis that he did not have a year’s service. It was decided that there was no continuous employment relationship between the assignments which had occurred since 2003 and had lasted for 2-3 days each week. Even if that period was counted as continuous, on the basis that he had worked for a part of each week, his service had subsequently been broken when in 2005 he had advised the employer that he was going on holiday and would not be available for two weeks. Under these circumstances, the gap could not be treated as a temporary cessation of work. The EAT upheld the appeal, confirming that every week in which the employee works must count, however long they work during that week, and that the two week holiday could count for continuous service as being an “absence by arrangement”. To do otherwise would suggest a worker could lose rights by asserting the right to holiday. The fact that the worker remained “on the books” was sufficient for him to be "regarded as continuing in the employment” during the absence, even though there was no contract of employment in place at that time.

Casual workers are entitled to statutory holiday under the Working Time Regulations. The practice of giving rolled up holiday pay to casual workers was ruled unlawful by the European Court of Justice in Robinson-Steele v PD Retail Services. Now, casual workers have a right to take holiday and payment in lieu can only be made in respect of unused holiday on termination of employment. Calculating the holiday entitlement can be difficult where it is not known in advance how long a casual worker will be employed. To simplify matters, it is possible to give the worker a notional amount of holiday per month and adjust their final pay according to the actual amount of holiday which has accrued, based on length of the assignment and any holiday taken. If the worker is employed on a series of discrete contracts, they will be entitled to a payment in lieu of holiday each time the assignment comes to an end and no holiday will accrue between contracts.

Employers who use casual workers will need to be mindful of the fact that the circumstances in which they are used may give them more protection than was intended. Ultimately, the risks involved may make organisations consider alternatives. However, replacing zero hours contracts in favour of using agency staff can present similar challenges, as case law has shown.