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What is the difference between a casual contract and zero hours contract?

Casual Contracts

  • The meaning of ‘casual worker’ is not defined in employment law and this can lead to confusion about the legal status of the individual. Whether someone is a worker, or an employee will depend on the true nature of the arrangement and needs to be established at the beginning of the relationship. (Make sure that you have the relevant contract in place!)
  • Often a lot of employers tend to take on casual workers where there is a need or a desire to operate a flexible system of work. This is often the most suitable arrangement where employers do not have a constant need for workers, or where the demand for work is irregular or unpredictable.
  • Casual workers will usually perform work only on an ad-hoc basis, or ‘as and when’ there is work available. There is usually no regular pattern or length of work. In most cases employers will have no obligation to offer work and casual workers will have no obligation to perform the work offered. This is what is meant by the absence of mutuality of obligation.
  • In addition, causal workers are not paid for periods of inactivity and has neither party has any obligation to each other.
  • If there is no obligation to offer and accept work, then the worker is not an employee
  • The arrangement should be reviewed regularly to ensure that the worker is truly a casual worker and has not become an employee through the nature of the relationship.

 

Zero Hours Contracts

  • A zero hours contract again does not have a specific meaning in law, but it can be summarised as an agreement between two parties under which the worker may be asked to perform work for the company.
  • There is no set minimum number of hours of work.
  • The contract will stipulate the level of pay individuals will get if they do work and should outline the circumstances in which work may be offered and, possibly, turned down.

The exact nature of zero hours contracts may differ between organisations. For example, those who work under zero hours contracts:

  • may be engaged as workers or employees (the definitions for these are outlined below).
  • may or may not be obliged to accept work if offered
  • Contracts should specify the employment status, rights and obligations of zero hours staff and confirm basic terms, including pay, holiday entitlements, notice and other terms which relate to the way work will be managed.
  • Employers should regularly review working arrangements to assess whether the way in which individuals are working has implications for their employment status. If their status has changed, the employer should consider issuing a new contract to reflect this.
  • Exclusivity clauses in zero hours contracts, used to tie workers into working for only one employer even when no work is offered, became unenforceable in May 2015. Zero hours employees have the right not to be unfairly dismissed and zero hours workers have the right not to suffer detrimental treatment for working elsewhere.

Which category the individual is in will depend on what the contract says and how the working arrangements operate in practice. Case law has established tests for determining employment status:

  • Employees provide a service personally, the employer controls how the work is done, and there is mutuality of obligation for the employer to offer work and for the employee to accept it in return for pay
  • Workers provide a service personally, but mutuality of obligation will not apply.

 

Three top tips……………..

  • Define the nature of the working relationship at its start
  • Ensure that you have the relevant paperwork in place
  • Review the arrangement on a regular basis