The seasonality of work in the hospitality industry has long made it popular for employers to engage staff in a variety of ways (and not just as employees working fixed hours). Zero-hours contracts, although controversial, are still an important tool for the industry and seem to be here to stay.
With the advent of the apprenticeship levy, more industry employers are engaging staff as apprentices. Agency workers can also be useful in enabling businesses within the industry to engage staff for specific events. Clearly a flexible workforce such as this has many advantages, but it also creates challenges which can be difficult to navigate. However, there are a number of key tactics that employers can use to overcome those challenges.
Undertake a personnel review
Understanding how each individual within your workforce is engaged (and what this means in terms of their legal rights) can help your business avoid the pitfalls of incorrectly classifying staff.
Too often businesses mistakenly treat employees as workers, workers as self-employed individuals, self-employed individuals as employees and vice versa, and trying to unpick these arrangements can be time-consuming. Who does the business engage on a zero-hours contract? Are those individuals workers or are they employees? Who is an apprentice and what does this mean for their employment rights? There is a lot to think about. Getting this wrong can also have significant financial consequences.
If a member of staff is a worker they will enjoy legal entitlements such as the right to 28 days’ paid annual leave each year (if they are full time), the right to be paid the National Minimum (or National Living) Wage, the right to be enrolled in a pension scheme and the right to statutory sick pay. Self-employed staff will not benefit from these entitlements, while employees will enjoy all this and more. If the business gets the assessment wrong, it may find itself faced with court and tribunal claims, and additionally (or alternatively) a challenge from HMRC.
A personnel review enables an employer to understand how an individual is engaged, ensure the relevant manager understands the arrangement and the potential impact of getting it wrong, and manage staff accordingly.
"Too often businesses mistakenly treat employees as workers,
workers as self-employed individuals, and
self-employed individuals as employees"
Ensure the contract reflects the reality
The contract is naturally the first port of call when determining a member of staff’s employment status. The problem is that, commonly, the contract does not reflect the reality – although, of course, it should.
There have been a series of cases in the courts and tribunals in recent months (involving companies including City Sprint, Addison Lee, Uber and Pimlico Plumbers) where individuals whose contract has categorised them as self-employed have been found to be workers (perhaps because they always were, or perhaps because the nature of the arrangement changed over time).
Ensuring the contract reflects the reality in the first place and is regularly reviewed to ensure this remains the case can help to avoid disputes and challenges to employment status further down the line. Zero-hours staff, for example, have the potential to be either employees or workers. Ensure it is clear from the outset which category they fall in to, and that the contract reflects what is happening in practice. If a worker on a zero-hours contract regularly performs their services for a fixed number of hours on a long-term basis, might it be more appropriate to move them onto a regular employment contract?
This should be considered on a case by case basis and staff within a particular category should not automatically be treated in the same way for these purposes. It is also worth remembering that, while an agency worker will be entitled to the same basic rights and benefits as an employee after 12 continuous weeks with the business, this won’t necessarily be the case with a worker. Treating a worker in the same way as you would these agency staff may unintentionally give them employee status, even if their contract says otherwise.
"There isn't a ‘one size fits all’ approach
when it comes to working out an
individual’s employment status"
Train your managers
It would be helpful if there was a ‘one size fits all’ approach when it comes to working out an individual’s employment status and the steps that should be taken to ensure that the arrangements in place reflect the business’s intentions. Unfortunately, this isn’t the case.
However, businesses within the sector can put themselves in the best possible position by equipping managers with knowledge about the different types of employment status and the rights that each relationship attracts, so that they can ensure compliance and minimise the chances of disputes arising.
It is better to address this before the problem arises and set boundaries from the outset. Training managers can prevent problems from arising and help managers to recognise issues at an early stage when they do surface .
Victoria Albon is an associate in Dentons’ Employment team. For more information on Dentons, click here