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Are your casual workers really employees? Make sure they have contracts.

05 September 2012 #Employment


Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.

A recent case highlights the pitfalls of engaging casual staff without a written contract.

Determining the employment status of causal workers is often difficult as the term suggests a relationship that is informal between the parties, with limited obligation on both sides. However casual workers will in some instances be considered to be providing their services under contracts of employment, despite working on an ad hoc basis and as such have more rights as employees. This would include the right to not be unfairly dismissed.

Casual workers can be engaged in a number of ways:

On a zero hours contract – the employer does not guarantee to provide work and only pays for the work done;

  • As bank staff –the employer can call on a pool of workers when the work becomes available but there is no obligation on the worker to accept it;
  • Under an umbrella contract - the worker is engaged on a series of individual contracts, but there is an over-arching contract (express or implied) that continues even when the worker is not working.

In considering employment status of a casual worker, one of the key issues will be whether there is “mutuality of obligation” i.e. is there an obligation on the employer to provide work and an obligation on the individual to do that work if provided?

The two questions to often ask to establish mutuality of obligation are:

  • Whether they are employees during the periods when they are working; and
  • Whether they can link those periods together by establishing sufficient mutuality of obligation during the periods when they are not working.

In Drake v Ipsos Mori UK Ltd [2012] UKEAT/0604/11 the EAT, focusing particularly on whether there was mutuality of obligation, considered the employment status of Mr Drake.

Facts

Mr Drake worked for Ipsos Mori as a market researcher on an ad hoc basis under a succession of individual assignments from 2005 to 2010:

  • He was never given a written contract or any contractual document;
  • He was told that there was no obligation on him to accept work and no obligation on Ipsos Mori to provide it; and
  • He was expressly told that he was a worker rather than an employee, but was given a handbook stating that, once he had accepted an assignment, it would be considered a "verbal contract" which Mr Drake was expected to complete within a given deadline.

In 2010 Ipsos Mori removed Mr Drake from its panel and he brought a claim for unfair dismissal which can only be brought by an employee who as sufficient continuing service. Mr Drake argued that he was an employee on the basis that each of his individual assignments was a contract of employment, and that there was an over-arching (umbrella) contract that continued even when he was not working, linking the assignments.

Ipsos Mori’s argument was that Mr Drake was not an employee because there was no obligation on the company to provide work to Mr Drake and no obligation on him to do that work if provided i.e. no mutuality of obligation existed within (or between) assignments.

Mr Drake’s argument was that he had to complete each assignment once he accepted it, while Ipsos Mori asserted that this was only a moral obligation because there was no sanction for non completion of the work.

Decision

The Employment Tribunal found in favour of Ipsos Mori, deciding that Mr Drake was not an employee as mutuality of obligation did not exist either during each assignment or between assignments and that the assignment could be terminated at any time without being completed.

The EAT upheld Mr Drake’s appeal finding that sufficient mutuality of obligation did exist for there to be an employment relationship and that there had existed a series of successive contracts between the parties. Despite either party being able to terminate the contract at will, the EAT found that this did not mean that there was no contract all.

The EAT remitted the case back to the Employment Tribunal to decide whether Mr Drake was fact, an employee, and whether he had sufficient continuity of service to bring an unfair dismissal claim.

This case is a reminder that casual workers may provide their services under a contract of employment, despite working on an informal basis. 

For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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