By Vaughan Granier
Casual employees are an important part of the economy. Many employers rely on casual employees to keep their operations running during temporary peaks in demand for their products or services, or to cover short–term absences of permanent staff. Some industries are especially reliant on casual labour; for example, retail, warehousing and cleaning.
Casual employees are characterised by the following:
- They do not have to say yes when asked to work;
- They have no expectation of regular or ongoing employment; and
- They get paid their annual leave entitlement as an extra 8 per cent of their ordinary pay or get paid it out on termination.
Once a casual employee starts working, they are on board and part of the company, then it’s easy for things to change. They become trusted, reliable and get called on more. The employee usually likes this, because it’s work that suits their life (and money in the pocket in uncertain times). The employer likes it because reliable casual employees who perform consistently are highly prized. But there are challenges.
Let’s look at three typical cases:
A casual employee (let’s call her Amanda) works in retail, and the store always has high demand on Fridays, and Saturdays. Amanda just fits with the team and the hours, and everyone is happy. Gradually, other casuals, who are less reliable, stop getting calls, and Amanda becomes the go-to person for Fridays and Saturdays. Eventually, she is working every Friday and Saturday and is not even called anymore to come in. She just arrives. After a year or so, COVID-19 hits and the store has to downsize. All the permanent employees are formally consulted, and the employer does a great job of following redundancy process. But, the head office doesn’t include Amanda, because she’s a casual.
Colin is a casual worker for a big company in the transport sector. He got hired on a casual contract along with two others. His father has cancer and sometimes Colin needs to take him to the hospital for treatment. He gets permission to do this and leaves early some days as a result. On those days, offloading trucks is a challenge. After three months the other two casual employees get offered permanent contracts and Colin is told the company doesn’t need him anymore. He finds out that lots of permanent employees there started out as casuals.
Grace works as a casual in a hotel for nine months, doing cleaning every Friday, Saturday and Sunday. It is her main source of income. She is expected to work every weekend. Sometimes she works with Suzie, who is a permanent employee. A month ago, Grace was sick and was told she was casual and therefore didn’t have any right to sick pay. She did not get paid for the weekend she was ill. Then, a guest complains of an item missing from a room Grace and Suzie had cleaned, and Suzie is subject to discipline and warned. The hotel simply says to Grace she won’t be working there anymore and gives her notice.
All three of these are examples of where the written casual employment contract is clear. But as employment practices change, the nature of employment also changes. It’s the employer’s responsibility to always stay within the boundaries of the employment contract, and casuals are the easiest kind of employees with whom a business can make mistakes without even realising it.
What has happened in each of these cases is a breach of law.
In the cases of both Amanda and Grace, the reality is that, at some point, they had shifted from being casual! They DID have expectations of ongoing employment, and they COULDN’T really refuse to work. They were needed and relied on. So, despite the fact that their written contract of employment was a casual contract, they were no longer, in fact, casual employees.
In employment law, the default employment relationship is “permanent”. So, if someone starts working, for example, with nothing in writing and nothing really discussed except a rate per hour, then they are a permanent employee. If the relationship is not meant to be permanent, you have to agree specifically what it is.
So, when the casual contract is no longer being complied with by the employer, and nothing was discussed, then the reality is that Grace and Amanda became permanent employees without a written contract. Specifically, they became permanent part-time employees rostered on their regular working hours.
In Colin’s case, the employer had used the casual contract as a way to test new employees to see if they were good enough. They had decided that his regular absences were a problem for them, even though he asked permission, and they didn’t want to hire him full time. Some employers, that are too large to use trial periods, can sometimes try to use casual contracts as a ‘disguised’ trial period. This is a breach of the law, because a casual contract may not be used to test employees instead of a trial period or probation period.
This, of course, meant that while all three employees were still employed, their employers were not complying with the law for the following reasons:
- They didn’t have the correct written contract, so the employer was in breach by not having proper documentation;
- They were not accruing annual leave in payroll (even if they were paid 8%) – they were entitled to accrue annual leave and take paid annual leave;
- Public Holiday provisions become applicable, as permanent employees, so their Public Holiday pay might now be incorrect, as well as the alternative days accrued by working Public Holidays;
- In Grace’s case, she was entitled to sick leave, as she had taken ill after six months employment on her normal working days, but was not paid (this can also happen with bereavement leave, and family violence leave); and
- Colin was actually a permanent employee (not even on a probation period!), and his employers never raised issues with him about their concerns over his leaving early to care for his father.
When it comes to the termination of these employees, it gets even more challenging because the courts work in hindsight. They work on reality, not theory. The contract is theory. The actual employment practices are reality. So despite what the written contract said, and even if an employer complied perfectly and in good faith with the termination obligations in the casual contract, the courts will look behind the contract, to what was actually happening in the workplace and the relationship, and will say that the employer should have acted differently based upon the REAL employment relationship, not the written contract.
Amanda was, in hindsight, a permanent part-time employee. Therefore, she had as much right to be consulted about the impact of the restructuring as any other employee. To exclude her from that process was unfair, and when her position was terminated to make way for a permanent employee to remain, she was unfairly dismissed. She was paid her one weeks’ notice under the casual contract but should have been paid four weeks’ notice. And she was not paid out her accrued annual leave or alternative days (of which, in hindsight, the employer never kept a record, thus also being non-compliant about that!) To add to that, excluding her publicly (in front of her colleagues) from the redundancy process would have been humiliating and distressing, and the court could award her significant damages for that.
Grace was, in hindsight, also a permanent part-time employee, entitled to fair disciplinary processes and should not have been terminated on one week’s notice without being given the same rights and consequences as Suzie. Her dismissal was therefore unfair.
Colin was not, in fact, a casual employee and was, in reality, employed as a permanent employee with no probation period. This is because there is no probation period – or trial period – if it’s not written into the contract of employment! His contract was a casual contract and had none of these provisions! So, in hindsight, because the casual contract was not, in fact, a casual contract, but an attempt to disguise a trial period, Colin was a permanent, full time employee from day one, and could not be dismissed fairly except through proper discipline, performance management, or restructuring processes!
As we can see, there is a large, blurry line in the sand separating casual from permanent employees – a line that is hard to see and very easy to cross! Employers with the best intentions can be caught out by the rush and demands of managing the workplace, and not even realise that they’ve stepped across this line.
Therefore, it is essential that business owners and managers understand a casual contract well, and use these contracts only for the purpose for which they were designed: to support a business at random times of peak demand or staffing shortfall.
If you need an employment contract template, HR Assured’s HRA Cloud is full to the brim with various HR and employment templates and documents – they’re ready to use, compliant and always up to date.
If you’d like to know how HR Assured can assist your business with an employment relations or HR matter, contact our experts today.
Vaughan Granier is the National Workplace Relations Manager for HR Assured NZ. He has over 24 years’ experience in international human resources, health and safety, and workplace relations management. With over 10 years working in New Zealand and Australian companies, he provides in-depth support to leadership teams across all areas of HR, Health and Safety, and employee management.