Hiring Temporary Workers

With retail spending at its lowest level since March 2021 retailers are hoping for bumper trade over the Christmas period. However, retailers have also experienced recruitment issues over the same period and therefore key to a successful trading period will be how you balance these two opposing issues.

Many retailers will be dependent on temporary staffing to cope with increased demand. Temporary staffing can offer greater flexibility, lower costs, and often provide employers with a quicker onboarding and exit process.

However, depending on the route you go down, temporary staffing arrangements can throw up some issues for the unwary – some of which we discuss below.

Fixed term Contracts:

Most temporary staff will be employed on a fixed term contract. Under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002, temporary employees must be treated the same as permanent employees working in comparable roles. Different terms may only be offered on justifiable reasons which should not include the fact that the individual is in a temporary role. The expiry of a fixed term contract is treated as a dismissal and the employer is required to demonstrate that the non-renewal of the contract was fair- a failure to do so could expose the employer to unfair dismissal claims ( the usual 104 weeks qualifying service is not required for a claim based on discrimination). Also to ensure that you have an option to terminate the contract in advance of its expiry date you should always include a ‘termination with notice’ clause without which you will be required to either employ or pay the individual for the remaining balance of their contractual term.

Zero Hours Contracts

Zero Hours Contracts create an ongoing contractual relationship but without any guarantee of work. An individual can be called upon when you need them, however they are not obliged to accept the work on offer. Therefore unless there is a high degree of trust between the parties a zero hours contract can be a precarious arrangement. Also as a result of the ruling in the Harpur Trust case individuals employed on an ongoing zero hours contract are entitled to a full year of holiday entitlement irrespective of the number of weeks they have worked and therefore to avoid this we would recommend that contracts are agreed on a fixed term basis instead.

Holiday accrual

To the relief of many employers the Government has revised the Working Time Regulations (WTR) to include provisions aimed squarely at addressing the flaws laid bare in the Harpur Trust v Brazel case in which it was held part year workers on permanent contracts were entitled to a full year’s holiday entitlement regardless of the number of weeks worked.

For holiday years from 1 April 2024 individuals who work irregular hours or part-year (such as temporary workers) will accrue holiday on the last day of each pay period at a rate of 12.07% of the number of hours worked during the pay period. This will ensure that their entitlement will remain in proportion to the hours that have been worked and differs from other employees who receive their full entitlement at the start of a holiday year. It is open to employers to allow the employee to take more holiday than they have accrued – in such cases its essential that employment contracts reserve the right for the employer to deduct over usage from final salaries.

For the same group of workers, the revised WTR sees a welcome return of rolled-up holiday pay. Rolled-up holiday pay is where the accrual in a pay period is paid to the employee with their basic salary rather than when they actually take their holiday. The practice was outlawed because in the opinion of the European Court of Justice it discouraged workers from taking time off. However, for many casual work arrangements rolled up holiday pay is the only logical approach and many employers have continued to apply it.

From 1 April 2024 rolled up holiday pay will be permitted on condition that:

• the individual is a part-year or irregular hours worker (i.e. includes temporary workers)
• the holiday pay is calculated using 12.07% of all pay for work done
• the holiday pay (12.07%) is paid at the same time as the pay for work done
• the holiday pay is separately itemised on the payslip.

It is also the case that an employer has a legal duty to ensure that an individual takes their statutory holiday entitlement each year and this duty applies even when they are paid using rolled-up holiday pay and not when they actually take their holiday – which could make it difficult to monitor.

However, with an effective date of 1 April 2024 these changes will come too late for the Christmas period.

Younger workers:

Seasonal work attracts younger applicants. Employers need to be aware that workers under the age of 18 are generally restricted to 8 hours per day and 40 hours per work (against the usual maximum of 48 hours) and there are specific conditions attached to working between 10pm and 6am. Rest breaks are also longer and more frequent (30 minutes every 4.5 hours). With regards to pay the National Minimum Wage rates apply and the relevant age increments should be adhered to. Studies also show that young workers are at a higher risk of injury in the workplace and more vulnerable to harassment and bullying from colleagues and customers – and yet as a temporary worker it can often be the case that Health and Safety (H&S) and other orientation exercises are rushed through or skipped altogether.

Agency Staff

Staff that are supplied through an agency have day 1 rights – such as protection against discrimination, entitlement to the National Minimum Wage and to 5.6 weeks of holiday per year, and the right to informed of any relevant vacancies in your organisation (a right that is often overlooked). Despite the fact that most of your agency workers will only be engaged for a few weeks it’s worth noting that after 12 weeks an agency employee on the same assignment is entitled to additional rights, such as the same rate of pay and holiday as your direct employees and also.

Volunteers

Volunteers are not employees and therefore are not entitled to employment rights such as the National Minimum Wage, holidays, sick pay, pensions etc. However, without careful management volunteers can quickly gain employee status. To safeguard volunteer status, you should avoid making payments that could be construed as wages – any expenses should be reimbursed against receipts wherever possible, and any perks should be minimised as much as possible. Obligations on the part of the volunteer should be reduced – a volunteer should be able to choose when to work and be able to refuse tasks etc. Any written documents issued to the volunteer should adopt flexible language such as ‘usual’ or ‘suggested’ rather than written as contractual undertakings.

Right to work checks?

Right to work checks are required for all employees and workers. For agency workers the responsibility lies with the agency rather than the end client – however it would be prudent to ensure that the term of engagement clearly states this. For your direct employees and workers, even those who are only employed for a day, you will need to undertake a right to work check in line with government guidelines. A failure to carry out right to work checks can result in a civil liability penalty of up to £20,000 per illegal employee and a prison sentence of up to 5 years in cases where the employer should have had ‘reasonable cause to believe' someone is an illegal worker. The obvious danger here is where the immigration authorities take the view that your volunteers are actual employees - per the comments made above.

Pensions

Where temporary workers are direct hires (i.e. not through an agency) you must assess them for auto enrolment pension eligibility in the same way as for other longer term employees. Therefore, if the new starter is aged between 22 and State Pension Age and earn at least £192 per week then they will be eligible for enrolment. However, the requirement to enrol can be avoided in most cases by using auto-enrolment postponement – a 3-month postponement can be applied within 6 weeks of the employment start date. Its worth noting that the employee must be formally notified on the postponement and their rights – one of which is the right to opt-in to the pension should they wish (and if they do then the employer must also make the necessary contribution). For an employee on an ongoing zero hours contract the postponement period is calculated as a continuous period starting from the commencement of the employment contract and is not therefore measured based on the time actually spent working for you (i.e. each assignment is not considered separately).

We have highlighted some of the potential risk areas with temporary staffing, however it’s fair to say nearly all retailers will be reliant on temporary staffing to some degree this Christmas and the following housekeeping items may help you along the way.

1. Hiring effectively and efficiently – have a clear action plan so that you and fellow recruiters know what you are looking for and how you can identify it.
2. Work to get the staffing levels correct – being under or overstaffed can have a detrimental effect on any staff member, but for temporary staff they may be less inclined to stick with you for the duration.
3. Get the employment paperwork correct – will you want fixed hours and fixed term contract, would a zero-hour contract work better?
4. Create an engaging induction process – the more engaged your temporary hires are, the better they will perform and the faster they will get up to speed. This goes hand in hand with training, which leads on to our next point.
5. Provide meaningful and comprehensive training to get staff up to speed quickly (and make sure this includes H&S). Temporary staff deserve the same quality of training as permanent staff. This also means you’ll get more out of them, and they’ll feel more invested in and valued by the business.
6. Look at management levels – Do you need to increase line management to realistically cover the increased staffing at all levels?

There’s no doubt that under the right circumstances and with the right management, temporary staffing can work well for both you as the employer and the individuals you hire.

For more information, please contact Suzie Woodcock.