The term ‘casual worker’ describes someone who is not part of a business’s permanent staff. A casual contract is an agreement where the worker offers services on a flexible or irregular schedule, mainly to meet variable work demands. Unlike employees, casual workers do not have a set number of hours each week, and there is no long-term commitment from either side.
This guide explains what casual employment involves, how it compares to zero-hours contracts, and what you need to know to comply with UK employment law in this area.
Summary
Casual Contracts v Zero-Hour Contracts
Rights and Legal Protections for Casual Workers in the UK
When Should Employers Use Casual Contracts?
Advantages and Disadvantages of Using Casual Contracts
Managing Casual Workers Effectively
Essential Clauses to Incorporate in a Casual Employment Contract
What are Casual Contracts?
There are various types of casual contracts, such as zero-hours contracts, self-employed or freelance agreements, contractor or sub-contractor arrangements, and short-term or fixed-term contracts. These agreements provide flexibility in on-demand staffing for employers, allowing them to adapt to changing business needs and control labour costs by hiring workers only when necessary, without the obligation of guaranteed hours or long-term commitments.
Industries that employ casual workers include retail, hospitality, food delivery services, healthcare, manufacturing, and construction.
Although casual contracts do not promise hours or income, workers under such agreements are still entitled to basic employment rights, including the National Minimum Wage and statutory holiday pay.
Casual Contracts v Zero-Hour Contracts
The primary characteristic of a casual contract is the absence of a guaranteed amount of work; employment is offered only when opportunities arise. There may be a condition for a minimum number of hours, but this is not always the case.
A zero-hours contract is a type of casual employment, similar to casual contracts, but it does not guarantee a set number of hours each week and often requires the worker to be available even if no hours are offered. The terms are frequently used interchangeably to describe employment that does not ensure minimum working hours.
A true zero-hours or casual contract means that:
- There is no mutual obligation between the employer and the casual worker, meaning neither side is committed to providing or accepting work
- The worker is only engaged on a casual basis and is not permanently on the payroll
- The employer is not required to offer work and
- The worker can also choose to accept or decline any work offered.
Usually, a zero-hour or casual worker has a very brief engagement with their employer. For instance, they might work as a bartender at a restaurant for three months during a busy period or do a few shifts at a takeaway while the delivery driver is off sick.
Compensation is usually calculated based on an hourly rate for the hours actually worked, and workers do not get paid during periods of inactivity.
Employers are legally prohibited from preventing zero-hours or casual workers on low incomes from seeking additional employment with other companies to increase their earnings. Since 2015, exclusivity clauses in such agreements have been deemed unenforceable under UK law. They are also not permitted to treat these workers less favourably or dismiss them unfairly for engaging with other employers.
Casual and zero-hours contracts have sparked controversy because they provide employers with considerable flexibility but leave workers with limited job security, unstable income, and fewer rights compared to those on a traditional employment contract.
The Employment Rights Bill, however, proposes significant changes to casual and zero-hours contracts by granting qualifying workers the right to guaranteed hours. It requires employers to provide a minimum number of hours based on workers’ recent working patterns during a specified reference period. Furthermore, the bill gives workers the right to reasonable notice for shifts, compensation for shifts that are cancelled or rescheduled, and strengthens protections against automatically unfair dismissal for workers who accept or decline guaranteed hour offers. These reforms, expected to take effect in 2027, aim to enhance financial security and stability for zero-hours workers, while still allowing them the choice to refuse the guaranteed hours offer.
Rights and Legal Protections for Casual Workers in the UK
The legal status of casual workers, and therefore their employment rights and legal protections, depends on whether they are classified as employed, self-employed, or as a worker. People who are not employees generally fall into two categories: independent contractors, such as the self-employed, or workers.
Employment Status
It is crucial for both you and the individual you hire to have a clear understanding of their employment status. Casual workers usually hold a ‘worker’ employment status; however, this depends on the specific working arrangement in place.
Characteristics indicative of worker status include the following:
- Casual Arrangement: Their engagement with the organisation is more casual; there is no ongoing obligation from either the employer to provide work or the worker to accept it.
- Flexible Hours: They are not guaranteed regular hours.
- Personal Service: The individual is typically required to perform the work personally and cannot delegate it to another person.
- Lack of Supervision: In contrast to employees, they may not be under the continuous direction or oversight of a manager.
- Not Self-Employed: Including not performing work for a customer or client of their own.
Rights and Legal Protections
Workers possess significant yet limited rights, which include:
- the right to a written statement of employment particulars
- the right to be paid at least the National Minimum Wage
- rights to rest breaks as stipulated by the Working Time Regulations (although these breaks do not have to be paid)
- statutory annual leave, pro-rated according to the hours they work
- itemised payslips
- protection against discrimination as per the Equality Act 2010 and
- the right not to be treated less favourably if they are employed part-time.
Casual workers do not have the same full entitlements as those with employee status. For example, they are not legally entitled to:
- minimum notice periods when their employment concludes, such as in cases of dismissal
- protection against unfair dismissal
- the ability to request flexible working arrangements
- time off for emergencies and
- statutory redundancy compensation.
Casual workers usually do not qualify for statutory maternity or paternity leave. However, in certain cases, casual workers may be eligible for family-related benefits, including statutory maternity pay, statutory sick pay, and statutory paternity pay. The eligibility depends on the specific circumstances and the individual involved.
Self-employed individuals have even fewer rights, emphasising the importance of precisely establishing a person's employment status.
When Should Employers Use Casual Contracts?
Employers should consider using casual contracts for tasks with highly unpredictable or fluctuating demand, such as seasonal work during peak periods like Christmas or summer holidays. Venues, caterers, and bars may need to hire casual staff for specific festivals, conferences, or other events. Casual contracts are especially beneficial for new businesses with uncertain revenue estimates or in their early stages, as they help reduce high fixed costs. Similarly, sectors with highly variable demand, such as tourism or certain care services, can benefit from a casual workforce.
Advantages and Disadvantages of Using Casual Contracts
In these circumstances, casual contracts offer a cost-effective way to provide flexibility, allowing businesses to adjust their staffing levels in response to changing operational needs. However, this flexibility must be genuine and accessible to both the employer and the employee.
Additionally, they enable companies to quickly recruit staff to meet increased customer demand, facilitating the hiring of skilled professionals who already have the necessary experience, thereby reducing training costs and time. Moreover, casual contracts do not involve a fixed obligation to pay for guaranteed hours or benefits.
Nonetheless, there are certain drawbacks linked to employing casual workers. Although initial labour costs may seem lower, the need for ongoing recruitment and training can make overall labour expenses less predictable. A shortage of permanent staff may lead to a decline in service quality or output, as the workforce might consist of many unskilled or inexperienced individuals. Additionally, casual workers may not feel as committed to the company's success as permanent employees, which could result in higher turnover and less dedication. Finally, it is important to recognise that managing payroll for a large number of casual workers, especially those with variable hourly rates, can be complex, time-consuming, and prone to errors.
Legal Considerations When Hiring Casual Workers
As an employer, it is crucial to recognise that the status of a casual worker may change over time if their working relationship becomes more regular or integrated, or if the employer gains greater control over their activities, which could result in their classification as an employee. Therefore, it is wise to document the casual nature of the relationship and to regularly review casual arrangements to ensure they genuinely reflect the reality of the working relationship.
Managing Casual Workers Effectively
Although casual work provides flexibility, it remains vital to treat workers fairly. Here are several practical measures you should adopt for the effective management of casual workers.
- Explicitly outline expectations and be open about the nature of casual work, including both the advantages and limitations of their role.
- Always supply a clear, current written agreement that specifies the worker’s status.
- Avoid offering shifts on an unpredictable basis that hinders staff from planning their time effectively.
- Establish a just and transparent system for scheduling shifts.
- If it becomes necessary to cancel or modify a shift, do so as early as possible.
- Keep precise records of hours worked to ensure accurate payment of wages and holiday pay.
- Where possible, allocate resources to training and skill development to enable casual workers to perform their roles effectively.
- Foster a sense of belonging among casual staff by involving them in team meetings, providing access to the same resources as permanent staff, and inviting them to social events.
- Make sure they are not barred from seeking work elsewhere. In particular, an exclusivity clause in a zero-hours contract or in a low-income workers' agreement that prevents a worker from taking on other employment through a different contract is not enforceable.
Essential Clauses to Incorporate in a Casual Employment Contract
To ensure everyone understands the arrangement, it is advisable to put the terms of a casual worker agreement in a written contract. Although there is no legally prescribed format, the contract should include essential aspects such as:
- The manner and timing of work offers
- A flexibility clause emphasising there is no obligation for the employer to provide work or for the worker to accept shifts
- The rate of compensation
- Arrangements for holiday pay
- Procedures for terminating the agreement
- Any notice requirements, if applicable.
Require Further Assistance?
Hiring casual workers can pose certain challenges, and it is essential to carefully consider how you want the working relationship to operate in advance.
Our experienced employment lawyers are ready to help you draft essential documents, assess employment status, or offer guidance on rights and responsibilities related to casual work. We can discuss your hiring needs and operational expectations to ensure the right contract is created for your business. Contact us today on 0330 173 6983 or email us.
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FAQ
Should I include casual workers on my payroll?
Absolutely, it is crucial to include casual workers on your payroll, regardless of how long they are employed, for PAYE purposes, as HMRC regards them as any other employee. This ensures you correctly deduct tax and National Insurance, pay holiday pay, and issue payslips.
Can I pay casual workers in cash?
You can pay casual workers cash in hand, but you must obtain their consent and ensure full compliance with tax and employment laws. This means you are still responsible for calculating and deducting the correct income tax and NI contributions through the PAYE system, providing payslips to the worker, and submitting the required information to HMRC. Failure to do so can lead to penalties and potential prosecution for tax evasion.
When does a casual worker transition to a permanent employee?
A casual worker can become a permanent employee if there are significant changes in the working relationship, such as an expectation that the employer will now provide work and the worker is expected to accept it, the work becomes more regular and predictable, or the worker is assigned tasks normally reserved for employees.
What does a variable-hour contract entail?
A variable-hour contract describes a situation where the worker does not have a fixed number of hours, and their schedule can fluctuate. It generally includes a minimum number of hours guaranteed annually or a minimum amount of time the worker must be available, distinguishing it from zero-hours contracts. Casual contracts often fall into this category, providing flexibility for both employers and employees.
