Are There Unintended Consequences Arising from New Legislation to Protect Casual Workers?

zero hours contracts

The new banded hours legislation which came into effect on 4th March 2019, it is argued, appears to be having unforeseen, unintended consequences. Dr. Juliet McMahon, for example, argues in the Irish Times this week that

“This advance may turn out to be a false dawn. Previous legislation proved toothless for zero-hours workers and this new Act looks set to change precisely nothing.”

The avowed purpose of the Employment (Miscellaneous Provisions) Act 2018 was to provide new protections for a range of employees who were working under so called ‘casual hours’ contracts.

This included employees who were engaged in bogus self-employment, workers with zero hours contracts; employees engaged in casual so called ‘precarious work’. (Read about the main provisions of this legislation here).

Zero hours contracts

Zero hours contracts were provided for in section 18 Organisation of Working Time act 1997 (read about zero hours contracts here).

A zero hours contract was one which obliged the employee to make himself available for work for a certain number of hours per week or as and when the employer required him. If the employer did not require him to work at all in a specific week then the employee was entitled to be paid for 25% of the hours they were contracted to do, or 15 hours pay-whichever was the lesser.

Note, however, that the employee was obliged to make him/herself available for work.

The new legislation, the Employment (Miscellaneous Provisions) Act 2018, attempted to improve the employee’s lot by providing the rate of compensation, in the event the employer did not require the employee to work in a particular week. was to be paid at a rate of 3 times the relevant minimum wage.

‘If and when’ versus ‘as and when’

Drawing a distinction between an ‘as and when’ contract and an ‘if and when’ contract may appear to be dancing on the head of a legal pin. But there is a vital distinction, one I have written about before in this blog post about zero hours contracts and ‘if and when’ contracts.

The typical ‘if and when’ contract has a clause in it which states that hours may be offered to the employee, but he/she does not have to accept them. Let me repeat that: the worker does not have to accept them.

This means there is no ‘mutuality of obligation’ between the parties and without mutuality of obligation there is no employer/employee relationship.

A typical provision will be “You have the right to refuse or accept hours of work offered to you.” If the worker has the right to refuse hours the relationship of master/servant, employer/employee does not exist.

And the consequences flowing from that are profound.

For if the worker is not an employee, she does not enjoy the benefit of any legislation which protects employees. Not the new legislation, not the old legislation. Not any.

None. No protection because the worker is self-employed.

Unintended consequences of new legislation

It has been suggested by Dr. MacMahon and Tony Dundon, professor of HRM and employment relations, both at the Department of Work and Employment Studies, Kemmy Business School, University of Limerick that one of the unintended consequences of the new legislation, the Employment (Miscellaneous Provisions) Act 2018, is the provision of an incentive for the employer to award ‘if and when’ contracts to certain casual workers to ensure they are not categorised as employees and enjoy the benefits of the legislation which protects employees.

However, this would only apply to new contracts as there is no reason why an employee with a contract of employment would give up his contractual entitlement to hours of work for an ‘if and when’ contract which would remove all employment law legislative protection.

Moreover, if I was an employer with a number of employees and I was seeking to rely on a clause in a contract-such as ‘you do not have to take the hours offered to you’-but all the surrounding circumstances and course of conduct pointed to a relationship of ‘employer/employee’ I would have a fear about a WRC officer finding the worker was an employee.

And if that occurred it would have significant consequences for my business as other workers would inevitably follow up with claims of being employees, in fact.

Conclusion

I believe it is premature and misconceived to argue that “Previous legislation proved toothless for zero-hours workers and this new Act looks set to change precisely nothing.”

There are significant new protections for employees arising from the new legislation, especially in relation to banded hours contracts.

The argument that a tsunami of new employment contracts will be provided by employers with unfavourable ‘non mutuality of obligation’ clauses, thereby putting the worker outside the legislation, is unlikely to hold up if employers are unable to get workers to agree to such unfavourable clauses. Moreover, existing employees are hardly going to give up what they have for contracts with clauses designed to put them outside the protection of the employment legislation net.