What are the pitfalls involved in hiring seasonal workers?

4 Apr 2018 By Alexandra Bonner and Katee Dias

Alexandra Bonner and Katee Dias explore the legal complexities employers should be aware of when meeting seasonal demand

Seasonal demand is an issue faced by many types of businesses, including hotels, restaurants and retailers. Two key options remain available to employers faced with seasonal peaks. The first is to add to the workload of existing staff, but this can be difficult to manage for several reasons. Performance may in fact go down if the employees cannot cope with the additional workload, while absenteeism may go up if the additional pressure becomes too much, with staff potentially being signed off with stress.

Another option is the recruitment of additional staff for busy periods. Before doing so, employers should consider the issues this involves. First, the employment status of any new recruit will need to be identified – be it an employee, worker or self-employed. Identifying the correct status is not always straightforward, particularly as the answer is dependent on specific circumstances and each category has its own legal definition. 

Employees and workers must both perform the work personally and are under the employer’s control. However, employees are also obliged to do the work whenever it is given to them, whereas workers frequently have the ability to refuse and will only be paid for work done. In contrast, the self-employed essentially operate their own businesses and generally have the freedom to decide how, when and who does the work. 

Correctly categorising the individual’s employment status is important because this will determine the employment rights of the individual, with employees being afforded the most rights and the self-employed the least. For example, employees have protection from being unfairly dismissed and the right to take family leave, whereas the genuinely self-employed have very few employment rights. It is a common misconception that workers recruited on zero-hour terms, a common scenario with seasonal recruits, cannot be an employee. Each situation will be judged on its own facts.

The length and type of contract for the seasonal recruit should also be considered. While a fixed-term contract is often used, fixed-term employees are protected against less favourable treatment compared to their permanent colleagues. For example, if an employer were to exclude the fixed-term employee from, say, the right to participate in the pooling of tips, it could be unlawful if there is no objective justification for such treatment. 

The expiry of a fixed-term contract is also treated in law as a dismissal and an employee will have protection from unfair dismissal if they have two or more years’ service. Although on first blush this may sound unlikely with this type of arrangement, situations can arise where an ‘umbrella contract’ is found to be in place (namely, that the individual is regarded as constantly employed despite gaps where they carry out no actual work for the employer). 

Employers also need to remember that individuals recruited on a part-time basis are entitled to protection from less favourable treatment compared to their full-time equivalents. It would not, for example, be lawful to only provide a friends and family discount to full-time employees and not to part-time ones, unless that difference in treatment can be justified on objective grounds. 

There are additional rules surrounding the recruitment of students, often a common source of recruits during holiday periods. In particular, there are additional working time obligations that apply to those under the age of 18 and strict rules governing the employment of someone who is not over the compulsory school age. 

A common solution for employers responding to seasonal demand is the engagement of agency workers who would normally be temps, hired via a third-party employment business. While an agency worker is usually not deemed to be either an employee or a worker, they still have certain rights. First, they should be given information about any employment vacancies and access to all collective facilities. Second, after being engaged for 12 weeks, they are entitled to the same rate of pay and enjoy the same basic working conditions as permanent staff. 

Clearly, employers looking to cope with seasonal demand by taking on extra staff have much to consider – not least identifying the employment status of each seasonal recruit. However, it is irrelevant how a business labels its temporary staff member: it’s how the law views that individual that will be decisive.

Alexandra Bonner is a partner and Katee Dias is a senior associate in the employment team at Goodman Derrick

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