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HMRC internal manual

Employment Status Manual

Agency and temporary workers: overarching contracts of employment - guaranteed minimum hours

A genuine contractual obligation on the part of the employer to guarantee a minimum number of hours work in any 12-month period is likely to be sufficient to provide an obligation on the part of the employer in the gaps between assignments.

Guaranteeing a minimum number of hours in any 12-month period would be akin to the employer paying a retainer i.e. there would be a guarantee of some remuneration whether or not there is work to be done. This is because if the guaranteed numbers of hours are not provided to the worker, then the employer has a contractual obligation to pay for the hours (or balance of hours) not provided at the national minimum wage or agreed payment rate.

The number of guaranteed hours which would be sufficient to give rise to an obligation on the employer’s behalf is not beyond doubt. It is understood that the 336 minimum guaranteed hours generally provided for in contracts, represents a notional one working day per week.

Provided the contract is a rolling contract of indefinite duration (with other terms and conditions that are consistent with a contract of employment) it is unlikely that mutuality ceases once the guaranteed hours have been worked, since the obligation to provide a further guaranteed minimum number of hours in the next 12 months will continue. Moreover, if there is an ongoing contractual relationship extending beyond a 12-month period, it is likely that the minimum hours guarantee would provide a sufficient continuing obligation on the engager in the gaps between assignments, and if the worker continues to be under an obligation to perform work offered, that would be sufficient mutuality of obligation.

It should be noted that a contract will not be an overarching employment contract purely as a result of the inclusion of a clause providing for a guaranteed minimum number of hours in any 12-month period. There must be mutual obligations during the gaps between assignments; there must be a sufficient degree of control exercised over the worker by the engager and other terms and conditions must be consistent with the contract being an employment contract.