Chances are at some point in your life you have had a ‘casual’ job. For many, casual employment is synonymous with a summer job. However, casual working arrangements have become more common in the fast-developing gig economy, where employers and labour-hire companies require workers intermittently for very short periods. While employment on a casual basis offers great benefits for the parties, employers need to be careful when employing staff on a non-permanent basis as they can quickly run into trouble.
A casual employee is a staff member who works on an ‘as and when required’ basis and has no guaranteed work hours or days of work. The employer is not required to offer the employee hours, and the employee is not required to accept the hours offered, so there is no expectation of ongoing work. For example, a worker called in to cover when another staff member is sick or has an unexpected absence.
Hold on I thought you couldn’t have a zero-hour contract
Over the years there have been a lot of news stories about what the media termed ‘zero-hour contracts’. This name unfortunately did not help people’s understanding of what the issue was and what the law that was implemented around the more correctly termed ‘availability provisions’ was actually trying to prevent. A ‘zero hour contract’ is an employment agreement that does not guarantee any work but requires an employee to be available to perform work if it becomes available, these agreements are now prohibited under employment law legislation. The difference between a casual agreement and a zero hour contract is that in a casual employment relationship the employee does not need to accept work when it is offered.
The wording of employment agreements is important…
‘Casual employment’, though widely used, is not defined in employment legislation. Sometimes the Employment Relations Authority is asked to determine if an employee’s employment was casual. The first consideration is what was the wording of the employment agreement. While the title of an agreement may include the word ‘casual’ in it, fishhooks to watch out for include:
- trial or probationary period clauses;
- guaranteed hours of work;
- whether holiday pay is accrued or provided for on a ‘pay as you go’ basis; and
- the amount of notice is given for termination of employment.
Employers should seek advice before they enter into casual employment relationships to ensure the terms of the employment agreement reflect the reality of the role or if a permanent part-time or fixed term agreement is more appropriate.
…but casual employment is more than just a label
We understand that working arrangements often change – staff members leave, and additional cover is required on an ongoing basis. If a casual employee started covering regular shifts, they may no longer be a casual employee – despite the label given on the employment agreement.
Casual employment will become permanent where a regular pattern of work is established, and ongoing employment can reasonably be expected by the employee.
The ERA has the ability to look beyond the wording of the agreement and determine whether an employment is truly casual, based on factors such as:
- the employee’s hours and days of work; and
- communications between the parties (including the offer and acceptance of work).
We recommend employers keep track of their team’s working patterns and regularly review employment documentation to ensure it is reflective of the actual arrangements.
A truly casual employee is entitled to receive 8% on top of their hourly rate as holiday pay (as they are as and when required they do not accrue annual leave). It is important that this 8% is identified separately on the employee’s pay slip.
Legal action against employers
As we have seen above, there are a few ways a casual employment relationship could morph into a permanent one. If the relationship is deemed to be one of permanent employment, the employee will be able to retrospectively enforce the rights and protections of this status such as:
- holiday pay (which may result in an employer paying the employee twice for holiday pay); and
- access to the personal grievance procedure (which could include remedies of reinstatement to the employee’s role, reimbursement of lost wages and compensation).
A recent ERA determination demonstrates employers should seek legal advice before letting casual employees know their services are no longer needed. In Dietz v Good Food Vibes Limited  NZERA 45, the employee was originally employed as a casual staff member but was completing a rostered period of work at the time of dismissal. She was awarded five weeks’ lost wages and $19,000 in compensation for her unjustified disadvantage and unjustified dismissal grievances. This goes to show getting legal advice before taking any steps can save you quite a bit of money in the long run.
Disclaimer: This information is intended as general legal information and does not constitute legal advice. If you have a specific issue and wish to discuss it, get in contact with the Black Door Law team.