When do casual employees stop being casual?

The use of casual employment arrangements can be a great way to fill unpredictable periods of work, including busy periods and to fill gaps in your business. However, like all other employees, casual employment is still regulated by the Employment Relations Act and the Holidays Act. The mistake we often see is when employers continue to treat an employee as casual, when the nature of the relationship has in fact changed over time.

While there is no legal definition of “casual employee”, it is accepted that they are engaged to work on an “as needed” basis. Furthermore, they are not obligated to accept offers of work from an employer, nor is the employer obligated to offer work. There should not be a regular pattern of work, as with this comes an expectation work will be both offered and worked.

If your business has casual employees who have been offered regular hours of work for more than a few months, there is risk that legally those casual employees would not be found to be casual and would instead be considered permanent employees. This has implications for both statutory holiday entitlements and how employment may be ended.

Unlike with casual employees, permanent employees do have a legal expectation that regular work will be provided by their employer. The failure to provide this could give rise to a personal grievance for either unjustified dismissal or unjustified disadvantage.

It is also not lawful to pay 8% holiday “pay as you go” to permanent employees.  While this can be done for casual employees, the amount must be identified on their payslip and the employee must be truly casual. If an employee is being treated as casual but legally is not, they would be entitled to also take paid holidays even if they have been receiving the 8% holiday pay with their wages.

The important thing to take away is that the nature of employment relationships can change over time. An employee may first start out as casual, but over time transform into a permanent employee with different rights in respect of offers of work and statutory entitlements.  For this reason it is important that employers are constantly monitoring the work patters of their casual employees and providing updated employment agreements if changes arise.

For any further information on casual employment or other employment law queries, please contact Jaime Lomas – [email protected]

This article was first published in the Raglan Chronicle.