The migration from casual to permanent employment
By Russell Drake
Many Employers choose to employ some of their Employees on casual agreements given the flexibility, and lack of permanent commitment, that can be obtained. This is particularly true when workflows within the business can vary significantly requiring Employee numbers to either be increased or decreased at short notice.
While a casual arrangement with some Employees may be exceptionally beneficial it can also lead to significant employment liabilities if not correctly managed.
By definition, a casual Employee has no regular hours or days of work and is engaged on an ‘offer and acceptance’ basis when work is available. The Employer cannot hold the expectation that the Employee will be available to accept work when offered or penalise the Employee in any way for declining work. Similarly, the Employee cannot hold an expectation that they will be provided with any particular amount of work and they cannot feel aggrieved if work is not offered to them. Casual Employees operating under this principle are the only group of workers who can legitimately receive “pay-as-you-go” annual leave payments generally calculated at a rate of 8% of the weekly earnings for each week that they complete work for the Employer (excepting in the case of a fixed term Employee).
The pitfall however is that a pattern of work may be established in as short as 3–4 weeks with the casual Employee then claiming they have an entitlement to permanent hours, or for payment of a non-worked public holiday which may have fallen on the day of the week that they have worked for the last 3-4 weeks.
Once a pattern of work is established the Employee’s status may have changed by ‘custom and practice’, rather than intention, which may also make them eligible for paid sick or bereavement leave entitlements (after 6 months) and, after the completion of 12 months service (from the original commencement date) four (4) week annual leave per annum. Section 28 of The Holidays Act 2003 implies that an Employee who has been receiving 8% pay-as-you go annual leave payments, who has completed 12 months service, may become entitled to four (4) weeks annual leave if a pattern of work can be evidenced, ‘despite the previous 8% payments’ – therefore creating a potentially expensive double dipping situation.
To ensure that this situation does not occur we suggest three simple strategies:
Ensure that your casual agreement documentation is robust to ensure that you are not obligated to commit to a permanent employment relationship, where one is not intended, unless such an agreement is recorded in writing and is signed as accepted by both parties to the employment relationship.
Closely monitor the hours/days worked by casual Employees on a weekly basis and schedule their work days in such a manner as to prevent a pattern of work being formed, particularly when a public holiday is looming.
If regular work is to be required, move the Employee to a fixed term or flexible hours agreement with provision (accurately recorded in writing) to take them back to a casual arrangement when the immediate need passes.
If you require any assistance with ensuring your casual employment processes are robust, or you wish to enquire about the benefits of flexible work arrangements, please feel free to contact us.