What Type of Employment Status Does My Employee Have in the UK?

When you employ staff, you refer to them as your employees. However, your employees may have different statuses depending on their employment contract type. This will determine whether they are permanent, fixed-term, or casual employees. The type of employment contract determines, for example, how long you employ your staff and what your obligations are towards them. You must be aware of the different employee statuses your employees could have. Not only will it ensure that you treat them correctly according to their employment status, but it allows you to exercise flexibility in terms of how you choose to employ your staff.

This article will explain the difference between permanent, fixed-term and casual employees. It will do so by defining each and then providing some points to consider when choosing the employment status of your employees.

What is an Employee?

An employee is a member of your workforce who has an employment contract with you. You require them to work, be available regularly, and personally carry out the work with you or a manager in charge of them. If your worker is an employee, you must provide them with work, and they must carry it out under your instruction. 

What is a Permanent Employee?

A permanent employee is an employee who has a written employment contract with you that details their terms and conditions of employment but does not specify an end date of employment. If your employee is permanent, it is up to you or your employee to decide when to end the employment contract.

Your permanent employees are those who may work for you for a long time, filling a necessary position within your business. If your employees are permanent employees, they will have job security with you, and you will benefit from retaining a skilled worker. If your permanent employee works for you full-time, they likely work 35-40 hours per week, and where they are part-time, they work less than 35 hours per week.

What is a Fixed-Term Employee?

A fixed-term employee is an employee who has a fixed-term employment contract with you. This means that their employment contract has a set duration which you decide in advance. Fixed-term employees have employment contracts that either come to an end based upon:

• a given date;
• the completion of a specific task; or
• the timing of a particular event.

While your fixed-term employees’ employment contracts have a set duration, these employees should still be treated the same way as your permanent employees. Once they have worked for you for a specific time, they have the same rights as permanent employees and protections to prevent less favourable treatment.

You may have employees who are on fixed-term contracts where they are, for example:

• a seasonal employee;
• a specialist in an area you are working on at a specific time;
• an employee covering maternity leave; or
• a casual employee.

A fixed-term employee must have a direct employment contract with you as their employer. This means that the following are not considered fixed-term employees:

• those working for you through a contract they hold with an agency;
• work-experience placements such as students and trainees;
• those on apprenticeship contracts; and
• members of the armed forces.

What is a Casual Employee?

A casual employee is someone who works for you as an employee but does not have a set number of hours. Instead, a casual employee is employed by you and carries out work as needed but not constantly. They often have an umbrella contract with you. This means that each time they carry out work for you, an individual agreement is in place, but an overall contract confirms that you have both agreed they are employed by you even when not needing to carry out work.

You may have employees who are casual employees where, for example:

• you run a seasonal business and only need some employees at certain times of the year;
• the work required for your business can vary, possibly depending on the weather or the economy; or
• your company has sporadic workloads, which can be the case for those in the arts industry.

A casual employee is different from a casual worker. They have more employment rights than a casual worker. There is often confusion in employment over whether a staff member is a casual worker, a casual employee or self-employed. It is, therefore, vital that you determine with your staff what their status is. This will determine their legal rights and protections.

Key Differences Between Permanent, Fixed-Term and Casual Employees

Here are some key differences to help you distinguish between permanent, fixed-term and casual employees. These may also help you choose which of these types of employment contracts is most suitable for your employees.

1. Offering your employees permanent contracts can increase employee commitment and business efficiency.
2. A permanent employee has a clear employment contract with clear terms, which can mean that if you break it, the damages you owe your employee are more significant than other employment contracts.
3. Offering a fixed-term employment contract to potential employees may not attract the best talent as they could be put off due to the limited duration of the employment contract and, therefore, job security.
4. When employees are on fixed-term employment contracts, you may find that your business spends extra time on administrative tasks such as extending contracts and training time.
5. Where you have employees on permanent contracts, you may have less flexibility in your business changing talent. 
6. An alternative to employing staff on a casual employment contract is engaging with self-employed individuals. However, as an employer, you may decide to hire casual employees as this avoids retraining people, mainly where your business is a niche sector.

Key Takeaways

Your employees will all have an employment contract with you. However, you may not employ all of them in the same capacity. You may have permanent employees, fixed-term employees or casual employees. The type of employees you have within your workforce will determine, for example, the length of time they are working for you, how often they work with you or whether they are long-term employees. You must have an idea of the different types of employment contracts. The type of business you have, such as the nature of the work and workflow, may determine whether you require permanent, fixed-term or casual employees.

If you need help understanding the difference between permanent, fixed-term and casual employees in the UK, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.

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