A truly casual employee is one who works on a "need as required basis". In order to determine whether a casual employee has in fact become a permanent part-time employee, the Courts have formulated a test which asks whether "an ongoing expectation of continuous employment" has arisen.

The Court has applied this test in a number of cases in which it had been asked to determine the true nature of an employee’s employment. In many cases, the employee commenced employment as a casual employee on an "as required" basis, but over time the nature of the employment changed, and developed into permanent part time employment.

The change from casual to permanent part-time employment is evidenced by a number of factors. The factors which are said to be indicia of regular ongoing employment include an employee being given regular or fixed hours, an employee having sole charge of the employer’s business, and an employee being required to seek the employer’s permission if unable to work. For example, an employee who was required to work according to a roster, or to obtain the employer’s permission if unable to work at the rostered time, was found to have moved from a casual state of employment to one of regular or continuous employment.

In our view, the period over which a casual may be called to work is not necessarily determinative of the matter. For example, a casual employee may be called upon to work "as needed" over a period of months or even perhaps years, without that employment ever becoming permanent, so long as there is no ongoing expectation of employment by the employee, and the employment does not take on a regular or continuous nature.

Of greater importance than a time period is the true nature of the employment. In particular, a casual employee must have no promise or expectation of regular or ongoing employment. Where employment is of an ongoing nature for a specified time period, the employee may be correctly regarded as a fixed term employee, rather than a casual employee.

Although a truly casual employee has no expectation of ongoing work, a question as to an employer’s obligations arises when a casual employee is part way through an engagement. In this case, the employee would need to be paid the balance of the engagement or be allowed to continue to work, unless in the case of serious misconduct, and then a fair disciplinary process would need to be followed.

Casual employees are entitled to holiday pay at the rate of 6% of gross earnings which may be paid on a "pay as you go" basis. The mode of payment, whether as part of the hourly rate or a lump sum at the end of the engagement, should be specified in the agreement. It should be noted that a casual employee is not entitled to an actual holiday. Furthermore, a casual employee is not entitled to paid special (sick, domestic or bereavement) leave.

The contents of this article are for information purposes only and should not be acted upon without specific legal advice. KPMG Legal does not accept any liability other than to its clients and only then in relation to specific requests for advice. KPMG Legal is an independent law firm.

If you would like further information please contact:
Peter Churchman - pchurchman@kpmg.co.nz
Jane Latimer - jelatimer@kpmg.co.nz
Clayton Kimpton - clkimpton@kpmg.co.nz

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