Dealing with casual employees in the workplace

27th January, 2017

Casual employees are an essential component in any business. They fill in the gaps when times are busy, dealing with seasonal demands and staff absences for production consistency.

Casual employees work for you intermittently or irregularly, and they don’t have to accept every offer of work you make.

They also need an employment agreement just like any other staff member.

Make sure you include a mandatory ‘Hours of Work’ clause in the agreement containing the following:

  • The amount of work they’ll get will fluctuate and is never guaranteed
  • How you’ll let them know when you would like them to work
  • That they’re not obliged to make themselves available for work
  • An indication of days and time periods they might be asked to work (under the new Standards Bill there are no zero hours’ contracts)

One problem that can occur with casuals is they can develop a regular work pattern over time, and employers will often mistake part-timers for casual workers.

If the work is or has become a regular pattern, then an employee should be on a permanent part-time agreement, or you risk becoming vulnerable to legal action for incorrect entitlements of leave for the employee.

It’s highly recommended you review your casuals regularly – every three to six months – and if they are regular workers then either change or amend their agreement to permanent part-time. Importantly, make sure  to update your payroll to accrue annual leave and other entitlements for this employee.

READ: How to recruit and retain high performing millennials

Dealing with leave entitlements for casuals

Holiday pay

Generally speaking, most casuals will be entitled to eight percent holiday pay, either paid as you go or accrued as a percentage.

This must be stated in the agreement, and if you are using the pay-as-you-go version, this must be shown separately on the employee’s payslip, and not included in their hourly rate as this would not be a valid method of showing/paying holiday pay for recordkeeping.

Sick and other leave

Casuals can become entitled to sick, bereavement or other leave if after six months they have worked the following:

  • An average of at least 10 hours a week and
  • At least one hour a week or 40 hours a month.

Again, review your casuals through reporting in your payroll/time capture options to do this hours test – and make sure you update their sick and bereavement leave entitlements (minimum five days per year for sick leave).

Public holidays

It can be quite tricky dealing with casuals and what to pay them for public holidays worked and not worked.

First, establish the following:

  • Which day the public holiday will be observed for each employee, and if it’s a public holiday that might be Mondayised
  • Whether the day is an “otherwise working day” for the employee
  • Whether the employee will be working on the day.

(The employment agreement should include details in relation to requirements for working on public holidays.)

When it is not clear what would be an “Otherwise Working Day”, Section 12 of the Holidays Act 2003 provides guidance on how to determine what would otherwise have been a working day.

Section 12(3) lists factors that are to be taken into account in assessing whether a day would otherwise be a working day for the employee. These are:

  • The terms of the employment agreement
  • The employee’s work patterns
  • Whether the employee works only when work is available
  • The employer’s rosters or other similar systems, and
  • The reasonable expectations of the parties that the employee would work on the day concerned.

Also available is an ‘Otherwise Working Day’ calculator on the Ministry of Business, Innovation and Employment website.

If a casual employee works on the public holiday they get paid no less than time and a half and if it was an “otherwise working day” they would also be entitled to accrue an alternative day as well.

Relevant Daily Pay for casuals

If the casual employee becomes entitled to be paid for a Sick/Bereavement/Alternative leave day or Public Holiday then you would pay them their relevant daily pay for that day in question, if this payment is not clear and could not determine that, then average daily pay can be used (Section 9 of the Holidays Act 2003).