What is the status of workers engaged on casual or zero hours contracts?

The fact that an individual is said to be engaged on a casual or zero hours contract does not determine his or her employment status. Whether or not an individual is an employee, a worker or neither will depend on the reality of the nature of the relationship and, in particular, whether or not there is mutuality of obligation between the parties.

The terms "casual contract" and "zero hours contract" are often used interchangeably by employers and there is a large degree of crossover between the two types of contract.

Under a casual contract, there is commonly no obligation on the employer to offer work to the individual and, crucially, no obligation on the individual to accept work that is offered. The intention behind this is often that mutuality of obligation does not arise and, therefore, the individual does not have employee status. However, if it can be demonstrated that, over a sustained period, an individual has accepted all the work offered, even if he or she has the contractual right to refuse it, there is a significant risk that, in the event of a claim, the tribunal will take a pragmatic view of the arrangement and find that mutuality of obligation exists and an employment relationship has been established under an overarching or "umbrella" contract.

A zero hours contract will typically (but not necessarily) differ from a standard casual worker agreement in that, while the employer is under no obligation to offer work, the individual is usually obliged to be available and to accept the work when it is offered. Employers who engage a number of "bank" staff often engage those staff under this type of contract. Tribunals and courts may, in certain circumstances, interpret this type of arrangement as being sufficient to fulfil the requirement of mutuality of obligation for an employment relationship to arise. For example, in Pulse Healthcare Ltd v Carewatch Care Services Ltd and others EAT/0123/12, the claimants were engaged under contracts entitled "zero hours contract agreement" but, in reality, they had worked fixed hours on a regular basis over a number of years. Once the rota had been prepared, the individuals were required to work and the employer was required to provide that work. The Employment Appeal Tribunal concluded that the claimants were employees.