With summer upon us, more businesses will be looking to recruit temporary workers to cover short-term busy periods. Legal expert Clare Thomas describes an employer's responsibility with regard to employment status.
Providing flexibility or specific expertise, temporary workers are proving a viable cost solution for many companies under pressure to tighten their belts while striving to grow. Small businesses also benefit from temporary workers meeting the need for cover and to manage short-term projects.
The informal relationship between the parties can lead an employer to assume that a "hire and fire" approach is acceptable. However, the extent of the temporary worker's legal rights and employer's obligations are dependent on their employment status. This is of crucial importance for the employer, not least because they will need to comply with legislation, but also because of the changes to be applied to the Agency Worker Regulations, expected to come into force by 1 October 2011.
A temporary worker is generally defined as one supplied by an agency on an ad hoc basis, usually without a defined period of employment. They can fall into any one of the three categories of employment status: employed, worker, and self-employed. Only "employees" have the full range of statutory employment rights.
Whether an employment relationship exists is a question of fact and of law. Personal service, mutuality of obligation, control over the worker and the extent to which a worker is integrated into a business are all factors in whether a temporary worker is an employee. However, the distinction is not always easy to make.
Alternatively, an individual could be a "worker", ie, working under a contract to provide services personally. Workers, while not entitled to the full scale of statutory employment rights, have the right to receive the statutory minimum holiday entitlement and for their working time not to exceed the limits set out in the Working Time Regulations 1998.
A temporary worker could also be truly self-employed.
If an individual is engaged either under an employment contract or a contract for services (ie, self-employed or worker), and regardless of who the actual employer is, a temporary worker will normally be protected from discrimination and harassment either by the agency or by the business using the temporary worker on all the usual grounds.
When the regulations come into force, even where the agency worker is an employee of the agency, the hirer business will have increased obligations towards them in terms of their basic employment conditions, such as pay, access to collective facilities and amenities, and advertising vacancies to agency workers.
IMPLICATIONS AND PITFALLS
Hiring a temporary worker is normally used to avoid taking on a permanent, or fixed-term, employee, who then acquires the most valuable statutory employment rights.
However, as employees have the greatest level of protection, temporary workers often try to claim they are employees of either the employment agency which provides them, or the business within which they are working. The distinction is not always easy to make and can become blurred.
Businesses must be careful how they contract for temporary staff. There must be no doubt about the worker's status, and this should be kept under review throughout to ensure that the relationship has not developed into one of employment (if that is not the intention). The employment status of the temporary worker will determine the tax treatment of any payments made to them.
Temporary workers should, similarly to permanent employees, be treated consistently and with care and respect in the workplace, to reduce the risk of discrimination claims.
• Consider your working arrangements with temporary workers, which may affect their employment status.
• If you hire agency workers, start considering now what is required of you to comply with the regulations, and keep abreast of any further developments.
A recent tribunal decision demonstrates the serious consequences that can arise when an employer is mistaken as to the correct employment status of its workers: one employer is reportedly facing a tax bill of more than £23m following a finding that it had mistakenly treated a worker as self-employed.