Casual or Permanent?

Written by: Alxemy


July 18, 2021

The question seems simple; however we see this being answered incorrectly time and time again, with the potential effects not only disadvantaging the employee, but also bearing unnecessary costs to the employer.

Before we answer the question, let us look at why this matters so much

  1. Casual employees are paid Annual Leave PAYG and do not become entitled to Annual Leave
  2. Because there is no expectation of future work, and each engagement is short-term, there can be no grounds for a personal grievance in relation to dismissal
  3. There are no guaranteed hours of work for casuals
  4. If casuals do not work, they don’t get paid (apart from specific scenarios where FBAPS leave applies)

What is the potential impact of the above?

With remediation work and having read many Enforceable Undertakings, if a casual is not a true casual, they should become entitled to annual leave. MBIE will then require that the employee be granted back any leave they should have become entitled to from the date they are deemed to have become permanent. The company can, however, not claim back any of the PAYG already paid to the employee, hence bearing double the cost effectively.

If employment courts deem an employee a not to be a casual, then that employee can have grounds for unfair dismissal and a whole range of other rights they would not have had as a casual.

Because zero-hour contracts are no longer legal (since 2016), if an employee is not deemed to be casual, they must be guaranteed a certain minimum number of hours.

Non-Casual employees should always be entitled to FBPAS leave per the holidays act 2003

How do the employment courts determine a casual employment status?

“In the absence of any definition of casual employment in the Employment Relations Act 2000 the Courts have assessed whether employment is casual against the following characteristics:

  • 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 any other engagement1
  • employees are only engaged for the specific term of each period of employment.

The question of whether or not a person has been employed as a casual employee depends on the mutuality of the intention at the outset of the employment and the nature of the work including its regularity, its hours and the obligations imposed on the employee.”

Casual work can evolve because of employer oversight into permanent employment, such as replacing an employee on long term leave. A case that related to this situation is Muldoon v Nelson Marlborough DHB

Casual entitlement to FBAPS leave

This falls under the Holidays Act 2003, and although the act does not talk about casual employment specifically, the following rules may be applied as they will likely affect casual workers (Taken from Section 63 of the Holidays Act). Also applies to Family Violence Leave (Section 72D).

Entitlement to sick leave and bereavement leave
(1) An employee is entitled to sick leave and bereavement leave in accordance with this subpart—
(a) after the employee has completed 6 months’ current continuous employment with the employer; or
(b) if, in the case of an employee to whom subsection (1)(a) does not apply, the employee has, over a period of 6 months, worked for the employer for—
(i) at least an average of 10 hours a week during that period; and
(ii) no less than 1 hour in every week during that period or no less than 40 hours in every month during that period.


As you can see, the answer to this question can bear large impacts on both employees as well as employers, so getting it right is important.

We recommend that, if you do not have something in place to monitor this, you engage with your payroll or time and attendance software vendors to see how they can help you monitor and report on casual employment.

This is something that requires ongoing monitoring and adjustments to payroll settings in order to be compliant and cannot be seen as a set and forget configuration.

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