Seasonally led businesses that employ extra staff during peak trading periods could be among those caught out by regulations on fixed term contracts. Nichola Evans, partner and employment law specialist at Rowe Cohen Solicitors, in London, spells out the rules that apply.

Same deal as permanent staff

‘Fixed term’ employees (that term includes temporary or seasonal) cannot be treated less favourably than comparable permanent employees unless there is a legitimate business reason for any difference, under the provisions of the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations, which took effect last October.

Less favourable treatment may be assessed in one or two ways: either each of the fixed term employee’s terms and conditions of employment should not be less favourable than the equivalent treatment given to their comparator or the fixed term employee’s overall package of conditions should not be less favourable.

Before you start dreaming up legitimate business reasons – like the implicit understanding between you and the employee that this was a seasonal appointment or the general acceptance that you operate in a seasonal industry – remember that use of this argument is not something to be taken lightly or used as a cop-out. The argument “It’s considered normal practice in our organisation” does not enter the legal equation. The reason would need to be sufficiently compelling to convince a court or employment tribunal.

Pay and benefits

Employers must be careful not to offer seasonal staff less annual leave, bonuses or training than regular staff. They enjoy all the normal protection that other employees have, such as the right to belong to a trade union, sick pay and so forth. One of their most important rights is their entitlement to the national minimum wage.

‘Informal’ arrangements to pay a stated amount by the shift, day, or part of a day are only legal if, on balance, the rate of pay equals or exceeds the minimum hourly rate specified by law. In fact, there is no such thing as an ‘informal’ employment arrangement. Every employee has a contractual arrangement with his or her employer whether they think so or not.

Don’t try using the old dodge of claiming that temporary workers are ‘freelancers’. The courts and tribunals have heard that one many times before and will not be impressed!

Parting of the way

If an employee is dismissed at the end of a fixed period or seasonal work, the mere fact that the need to employ someone has reduced (say, by the project nearing completion, demand falling or supply declining) does not in itself make the dismissal fair. You can’t just tell an employee that they’re laid off. If the worker has clocked-up one year’s employment then he or she may present an ‘unfair dismissal’ claim to an employment tribunal.

Continuity of service

If workers are engaged – but then laid-off for a very short period of time – then re-employed, an employment tribunal may take the view that there has been more than one year’s continuous employment. The tribunal may also choose to tot-up a number of years’ service and decide that there has been continuity of employment – then award more compensation accordingly.

This may present difficult management problems in a fluctuating, essentially seasonal trade but that is where the law stands. Not having kept detailed records of seasonal or temporary employees’ past periods of employment will be no defence. They can easily produce National Insurance or Inland Revenue evidence to the contrary.

Notice periods

If an employer wants to let a seasonal worker go, the normal rules must be followed, ie if the employee has been employed for more than one month, he or she is entitled to a paid notice period of at least one week. The law states that one week’s paid notice is due for every year of employment, up to a maximum of 12 weeks. If the contract of employment is more generous on the question of notice periods, then that must be observed.

It’s sensible to build this additional cost into wage calculations. If the employee’s services are no longer required and you have nothing to constructively occupy them with, it might be simpler to make a payment in lieu of notice.

Last in – first out?

Employers are also not permitted to select fixed term workers first for redundancy. Dismissing or selecting these workers for redundancy purely because they are on fixed-term contracts counts as unfavourable treatment, as does denying them promotion opportunities available to permanent employees. However implausible this might seem, they must be treated exactly the same as permanent employees.

In the past it has been common practice for temporary and seasonal workers to be regarded as ‘second-class’ employees and treated shabbily in terms of pay, conditions, notice and bonuses. Employees can no longer be made to suffer because there are slack periods and income shortfalls. The law makes no exceptions to accommodate particular industries where market or trading conditions fluctuate more than usual. It’s up to the employers to iron out the peaks and troughs in income and expenditure.

Not me, surely?

For many managers and business people in quintessentially seasonal trades and industries, these legislative changes mean re-addressing and changing both attitudes and practices accrued over their entire working lifetime.
Change they must. Fixed term workers have been quick to learn that they are no longer the poor relations in the employment family.

This legislation has teeth – and they bite where it hurts most, straight into the bottom line. Industries and organisations that have been slow to adapt and accept this new order are discovering, as they write out hefty cheques to cover compensation awards, that times really have changed.

If you’re in any doubt, seek professional advice from an employment law specialist.