Last reviewed 11 May 2017

Gudrun Limbrick looks at contracts and seasonal working.

Any company’s business is to meet demand and maximise profits from doing so. Failing to meet demand can mean that opportunities for income leaving the company short in the potential pocket. Worse than that. However, it can leave a space in which competitors can step in, gaining income and perhaps customer loyalty into the future. In many fields, demand can be largely steady over a given time period, and so a steady supply is appropriate. However, other businesses are faced with a demand that fluctuates over time (for reasons outside of their own marketing activities) which can mean that supply has to vary in equal proportions if the company is to continue to compete effectively.

Most traditional seasonal fluctuations are around harvest time in agricultural communities, Christmas in virtually all retail and entertainment businesses in the UK and school holiday times in holiday resorts. However, there are other fluctuations in demand which lie outside their more traditional times. For example, big sporting events such as football finals can create massive increases in demand in all manner of businesses — television sales, public houses, local food delivery, team shirts and so on. Additionally, the media can now create demand with a film release creating demand not only for branded merchandise but for featured products. The Finding Nemo films led to an increase in aquariums purchased, for example. More and more television programmes are now following suit. Each successive season of the BBC series Peaky Blinders, for example, appears to be creating a peak in demand for vintage caps. Fluctuations like these can be somewhat tricky to predict in terms of timing, scale and longevity as they are dependent almost entirely on the whim of a population.

Fluctuations in demand can mean an organisation needs additional productivity — whether a business is making a product, selling that product or providing a service. And these changes may not only be in the companies directly affected but also in those businesses serving the companies that are attempting to meet the peak in demand. This additional productivity will invariably need extra people power, and people power can be expensive to recruit. The question is, what is the optimum way for a business needing to recruit more people to cover a busy period?

The primary factor in deciding how best to get more people power is the size and longevity of the peak in demand that is needed to be met. A small increase which is expected to last for a limited period of time, can perhaps be met without need to recruit additional workers as, for example, when a shop is busy, a staff team can generally be encouraged simply to work harder to get customers through the checkouts and away. A longer period of busyness may warrant personnel incentivisation measures to help staff keep going — from saying thank you, to pledging staff bonuses and other perks. Offering overtime to staff can also be helpful, especially when a busy period happens suddenly and there is simply no other way of increasing staff hours quickly enough. With these short term, internal, methods of increasing productivity, monitoring is needed to ensure that quality is not affected by the extra demands made on existing staff team.

Utilising agency staff can also be an option for immediate needs to increase the staff team. This does, of course, has cost implications as agency staff can be very expensive relative to what they add to productivity. Agency staff used for longer than 12 weeks will also be entitled to employment rights as laid out in the Agency Workers Regulations 2010. Aspects of this are the responsibility of the company and not only the employment agency such as. For example, access to facilities such as staff canteens and rest breaks.

Primarily because of the cost, agency workers may not be a long-term option for companies attempting to meet fluctuations in demand. Alternatives include having workers on seasonal contracts and, the relatively new kid on the block, zero-hours contracts. To take the latter first, there are numerous advantages to having all or some of the workers on zero-hours contracts.

A zero-hours contract means that an employer does not have to commit to offering any paid employment at all to a worker. In any given time period, they can offer zero hours, a full-time equivalency of hours or anything in between. The worker is under no legal obligation to accept any of those hours offered. The benefits of this to a company experiencing predicted or unpredicted fluctuations in demand are obvious — they only have to pay for the number of hours actually worked. Thus, in financial terms, it’s a definite win for the company — pay more on staff when you have to pay more, pay nothing for the rest of the time. Theoretically, whole sections of a company could be served by workers on zero-hours contracts. Thus, to use a clear illustration, when it rains, no ice cream sellers are called into work leaving a staff bill of zero; on a warm day, half the workers could be brought in; and when it’s a heatwave, all possible workers are out selling ice creams.

However, zero hours is a broad term which covers a wide range of circumstances. On the one hand, for example, a zero-hours contract could be offered to some who is genuinely self-employed with other contracts with other companies. In this way, they manage their own tax and National Insurance and are paid the rate agreed with the recruiting company having no further responsibilities. However, this may mean that when the worker is called on to come in at short notice, they may have other work already booked in, perhaps with a competitor.

On the other hand, the individual may not be genuinely employed and their zero-hours contract will thus form a form of employment contract. They will thus be entitled to full employment rights on a par with other employees on more standard contracts. This can reduce the financial benefits to the employer.

A seasonal contract has the advantage that an employer is, arguably, more likely to show up and stay until the end of the contract than a zero-hours worker who may have other calls on their time or be seeking more reliable work. However, they do need some advance knowledge of the timing and scale of the peak in demand they are to cover. For this reason, they tend to work in those more predictable areas such as Christmas retail work and work in summer holiday resorts, and where potential employers are in relatively short supply so that employers can have more certainty that they will have enough staff each day.

That zero-hours contracts are rising in number is indisputable. However, just because they are useful in some areas does not mean that they will take over standard employment contracts in all fields. Seasonal contracts win the day in areas where peaks in demand are more predictable and there are relatively more jobs than people to take on those jobs. In situations like this, a company relying on workers or employees on zero-hours contracts may find they have stopped waiting for the phone to ring and have got themselves other work.