Traps when using Casual Agreements

Traps when using Casual Agreements

Casual Employment Agreements

Employment lawyers and employment law specialists are often called upon to give advice on casual employment agreements that have gone wrong.

Casual agreements can be a tricky issue in employment law. At first glance a casual agreement would appear to be a flexible tool for employers. Casual agreements can however also be a source of unexpected personal grievances or adverse financial implications if handled incorrectly.

Relationships that change over time

In determining the nature of an employment relationship, the Courts and Authority are mandated to look at the real nature of the relationship. The real nature of the relationship may vary from that described in an employment agreement and often changes over time.

Where an employee argues an unjustified dismissal, the Court has found that it is required to determine the nature of the relationship between the parties at the time that it ended. Accordingly, an employee that may have once been casual, may be determined by the Court or Authority to be permanent (part-time or full-time) at the relationship’s conclusion.

In a recent decision, the Employment Court set out the following factors are indicative that the employment relationship was casual in nature:

  • Engagement for short periods of time for specific purposes;
  • a lack of regular work pattern or expectation of ongoing employment;
  • employment is dependent on the availability of work demands;
  • no guarantee of work from one week to the next;
  • employment as and when needed;
  • the lack of an obligation on the employer to offer employment, or on the employee to accept another engagement; and
  • employees are only engaged for the specific term of each period of employment.

Where over time a regular pattern of work emerges there is a real chance a relationship may be found to be full-time or part-time permanent employment. In such circumstances, withdrawing or ceasing to offer hours could well be found to be an unjustified dismissal.

Holiday pay issues and pay as you go

The Holidays Act 2003 recognises that as casual employees have irregular patterns of work, it is necessary to use “pay as you go” terms to address holiday entitlement. “Pay as you go” describes paying an additional 8% with ordinary pay to recognise holiday entitlements.

The major trap with “pay as you go” is a failure to meet the strict terms of the Holidays Act could result in an obligation to pay holiday pay again.

The Act clearly states that an employer who incorrectly pays holiday pay with an employee’s regular pay may be required to make further holiday payments to the employee. Therefore, if an employee is not found to be casual, an obligation to provide for annual leave may arise despite having paid the additional 8%.

The Holidays Act 2003 requires that the annual holiday pay is paid as an identifiable component of the employee’s pay, and a failure to document this in an employee’s pay slip may also lead to obligations to pay additional money.

KiwiSaver issues

The KiwiSaver Act 2006 does not require temporary employees to be automatically enrolled in the scheme. This would eliminate the need to enrol most casual employees.

The catch, however, is that where a temporary employee works for greater than 28 consecutive days, then there is a requirement to enrol the employee. A failure to enrol an employee that is eligible for KiwiSaver can lead to a personal grievance where the employee may claim a loss.

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