Hospitality focus: zero-hours and casual staff

In many cases it will be straightforward to identify the employment status of an individual, or a group of individuals, providing work for an organisation. However, that is not always the case and difficulties may arise for those hospitality businesses who opt to engage staff on a casual basis or engage staff working irregular hours or under arrangements where no hours are guaranteed.

Correctly characterising an individual’s employment status is of crucial importance to ensure businesses understand and comply with their respective obligations and responsibilities. This is because the employment rights and benefits available to an individual working under a zero-hour or casual contract hinge on their employment status as a worker, employee or self-employed contractor.

Businesses that wrongly categorise individuals working for them, which is something that has been increasingly challenging in recent years, can result in unexpected liabilities for the company. This is a particularly significant consideration for those organisations within the hospitality sector, due to the number of individuals working atypical patterns.

The focus of this article concerns the status for employment (rather than tax) purposes of those individuals who are engaged on a ‘casual’ or a ‘zero-hour’ basis in the hospitality sector.

‘Employee’ and ‘worker’ rights

Employees have the most rights and protections afforded to them under employment law. An individual is likely to be employed when they are expected to always be available for work during their working hours and receive instructions from the business regarding the work they are required to carry out and how they are expected to undertake it. They are also expected to carry out the work themselves (without any option to send someone else in their place to do the work).

Employees benefit from all of the rights afforded to workers (see below) and also have the following additional rights, not available to workers.

• Eligibility to present claims of unfair dismissal (after two years’ continuous service unless dismissed for an automatically unfair reason where two years’ service is not required)
• Redundancy pay (after two years’ continuous service)
• Statutory minimum notice periods if dismissed
• Rights to parental and shared parental leave and pay
• Rights to maternity, paternity and adoption leave and pay
• Rights to parental bereavement leave and pay
• Time off to care for dependants and to carry out public duties
• The right to make flexible working requests (after 26 weeks’ continuous service)

Workers have fewer rights than those who are true ‘employees’. However, workers still have the following important statutory protections.

• A right to written terms outlining their job rights and responsibilities
• To receive pay in accordance with the National Minimum Wage Act 1998
• To be paid statutory holiday and receive rest breaks under the Working Time Regulations 1998
• To be provided with payslips
• Protection in relation to whistleblowing and against unlawful discrimination
• Protection from being treated less favourably if they work part-time

Workers may also be entitled to receive certain statutory payments, such as Statutory Sick Pay (SSP) and Statutory Maternity, Paternity, Adoption, Parental and Parental Bereavement Pay, as the definition of ‘employee’ is wider for these purposes than the standard definition and may also encompass some workers.

Zero-hour contracts

Whilst there is no consistently applied definition, a zero-hour contract usually delineates a contract between a business and an individual where the individual is engaged on an ad hoc basis with no guarantee of work provided by the business, and no obligation for the individual to take on the work offered.

Accurately determining the correct employment status of an individual working under a zero-hour contract is not always a straightforward question but it is an important one given the difference in rights and obligations highlighted above.

The starting point is to consider the terms of any contract/agreement and the description of the relationship between the parties. It is important to note that this is not usually the only or the determinative factor in concluding employment status. How a working relationship operates in practice will also be important when assessing employment status – this has been made clear by the courts and tribunals in cases dealing with this topic.

Where the work is genuinely ‘casual’ in nature, working hours are irregular or are not guaranteed (zero-hour), or an individual is not obliged to make themselves available for work, they are likely to be considered a ‘worker’ for employment status purposes. The absence of mutuality of obligation (in other words, the business does not guarantee work and the individual is not obliged to accept work), key to the status of an employee, means that most of those engaged under zero-hours contracts in the hospitality sector will be regarded as ‘workers’ rather than ‘employees’.

However, when looking at the question of employment status, the employment tribunals are also concerned with the true relationship between the parties and not just the written terms. This means that individuals working under zero-hour contracts can be found to be employees in certain circumstances. Regular work patterns developed over a period of years may lead to an overarching contract, which exists between assignments and can create a permanent employment relationship, overriding the express terms of the contract.

Statutory protections

Irrespective of status, there are statutory protections that the Government has introduced, which apply to zero-hour staff. This includes a ban on exclusivity clauses for zero-hours contracts, meaning that it is unlawful for an employer to prevent an individual working under a zero-hour contract from working elsewhere. Those working under zero-hour contracts also have the right not to be unfairly dismissed (or subjected to a detriment) for not complying with an unlawful exclusivity clause.

Most recently, the Government has passed legislation which is expected to commence from September 2024, which will mean that workers who work atypical hours have a right to request a more predictable work pattern (see our recent article).

Birketts view

It is perfectly possible and lawful to engage individuals on a zero-hour, casual or irregular hours basis. Hospitality and other sectors often see significant benefit in using zero-hour contracts or similar arrangements, given the inherent flexibility these contracts bring. It is also the case that the use of more flexible arrangements may suit many individuals as well as businesses. It is, however, important for businesses to use such arrangements correctly and with the knowledge of the associated rights that particular working patterns and employment status can bring.

The written terms of the arrangement between the parties are important but not necessarily determinative. Employers should therefore consider regularly reviewing the arrangements they have in place with staff who work on zero-hour or similar casual-type arrangements. In particular, those who have more regular and consistent working patterns and who have been engaged for two or more years would present a greater risk.

Our hospitality and leisure sector employment specialists will be happy to advise any employers who require advice on this topic, or who have any other questions relating to employment law.