What Every Employer Should Know About Casual Employment Contracts
- Anne-Marie Dolan
- Aug 13
- 7 min read
Casual employees can give your business valuable flexibility. They may help cover unexpected absences, busy periods or work that cannot be planned in advance. However, calling someone ‘casual’ does not automatically make them casual. What matters is how the employment relationship works in practice.
If a casual employee begins working regular shifts or is expected to remain available for work, they may have become a permanent part-time employee. This can create problems with holiday pay, leave entitlements, guaranteed hours and the way their employment can be ended.
What is a casual employee?
New Zealand employment legislation does not provide one complete definition of casual employment. Generally, a genuine casual employee:
has no guaranteed hours,
does not have a regular pattern of work,
has no ongoing expectation of being offered work,
is offered work as and when it becomes available, and
can accept or decline each offer of work.
The arrangement should provide flexibility to both parties. You do not have to offer the employee work, and the employee does not have to accept it.
For example, a restaurant might contact a casual employee when a large function is booked or another employee calls in sick. The casual employee can decide whether they want to work that shift.
A person who works every Friday and Saturday, week after week, is less likely to be genuinely casual. Their employment may be permanent part-time, even if their agreement and payslips describe them as casual.
When should you use a casual employment agreement?
Casual employment may be appropriate when your need for additional workers is genuinely unpredictable or intermittent. Examples may include:
covering an employee who is unexpectedly absent,
helping with occasional events,
responding to sudden increases in customer demand,
completing work that arises irregularly,
providing additional cover during uncertain busy periods, or
maintaining a pool of workers who are free to accept or decline individual shifts.
Casual employment should not be used simply because the employer does not want to guarantee hours or provide normal employment entitlements.
If you know you need someone for 15 hours every week, a permanent part-time agreement will usually be more appropriate.
If you need someone for a defined temporary reason, such as covering parental leave, a fixed-term agreement may be appropriate instead. A fixed term must have a genuine reason based on reasonable grounds, which must be recorded in the agreement.
Choosing the wrong agreement can expose the business to claims for unpaid entitlements or an unjustified disadvantage or dismissal.
Do casual employees need an employment agreement?
Every employee must have a written employment agreement, including casual employees. A casual employment agreement should clearly explain:
that there are no guaranteed hours of work,
how the employer will offer work,
that each offer is a separate opportunity to work,
that the employee is free to accept or decline an offer,
how and when the employee will be paid,
the employee’s duties,
the place or possible places of work,
how holiday pay will be handled,
what happens once a shift has been accepted, and
the usual clauses required in an individual employment agreement.
The agreement should match the real arrangement. A well-written casual clause will not protect an employer if the employee actually works a predictable, ongoing roster.
The parties must also deal with each other in good faith. This includes being honest and communicative about how work will be offered and any changes to the relationship.
Should I manage casual employees differently from other employees?
Casual employees have many of the same minimum rights as permanent employees, including minimum wage rights, rest and meal breaks, protection from discrimination and a safe workplace. The main difference concerns the offer and acceptance of work.
Offering shifts
You should make it clear that you are offering a shift, rather than directing the employee to work it. The offer should identify the date, hours and place of work. Keep a record of the offer and the employee’s response. A roster, scheduling system, email or text message may provide this record.Once the employee accepts the shift, an employment commitment has been made. The employee is expected to attend, and the employer is expected to provide and pay for the agreed work.
Declining work
A genuine casual employee should normally be able to decline an offered shift. You should not punish them simply for exercising that choice. If you require an employee to remain available for work, the arrangement may not be genuinely casual. It may also raise issues under the availability provisions in the Employment Relations Act 2000.
An availability clause must meet legal requirements, including having agreed guaranteed hours and providing reasonable compensation for the employee’s availability. A clause that simply requires a casual employee to be available whenever the business calls is unlikely to provide the flexibility that genuine casual employment requires.
Ending an accepted shift
Do not assume that you can cancel an accepted shift without consequences. Check the employment agreement, any shift-cancellation clause and the circumstances of the cancellation. If the employee has accepted the work, cancelling it at short notice may require payment. It could also breach the agreement or the employer’s duty of good faith.
When does a casual employment contract stop being casual?
There is no single number of shifts or length of service that automatically changes a casual employee’s status. Instead, you need to look at the overall relationship. Warning signs include:
the employee works the same days or hours each week;
the employee is placed on a regular roster;
there is an ongoing expectation that work will be offered;
the employer expects the employee to accept shifts;
the employee must obtain permission to be unavailable;
the business relies on the employee as part of its normal staffing;
the hours are reasonably predictable; or
the arrangement continues without meaningful breaks.
A gradual change can be enough. An employee might begin by covering occasional absences but, several months later, be working every Monday, Wednesday and Friday.
At that point, the reality may be permanent part-time employment. Continuing to call the person casual will not prevent the Employment Relations Authority or Employment Court from looking at how the relationship actually operates.
What should you do when the work becomes regular?
Review casual arrangements regularly. For active casual employees, a review every three to six months is sensible. If the employee’s work has become regular and ongoing:
Discuss the change with the employee.
Confirm their normal days and hours.
Offer a permanent part-time or full-time agreement, as appropriate.
Record the agreed change in writing.
Review their annual holiday and other leave entitlements.
Stop pay-as-you-go holiday payments if they no longer qualify.
Check whether any previous payments or leave balances need to be corrected.
Take payroll advice if you are unsure how to move from pay-as-you-go holiday pay to annual holiday entitlements. Errors can become expensive if they continue for several years.
Can you simply stop offering a casual employee work?
Where employment is genuinely casual, there may be no obligation to offer another engagement after an agreed shift or period of work ends. However, simply removing someone from the roster can be risky if:
their work has become regular and ongoing,
they had already accepted future shifts,
they reasonably expected the employment to continue,
the decision is connected to a complaint, leave request or protected characteristic,
the employer is responding to alleged misconduct or poor performance, or
the agreement requires notice.
If the employee has effectively become permanent, stopping their shifts may amount to a dismissal. The employer would then need a substantively justified reason and a fair process. Even with a genuine casual employee, do not stop offering work for an unlawful or discriminatory reason. Seek advice before using non-allocation of work to deal with performance, attendance or conduct concerns.
Common mistakes employers make with casual employees
The most common casual employment mistakes include:
using a casual agreement for regular weekly work,
believing casual employees have no leave rights,
adding 8% holiday pay without separately identifying it,
requiring employees to accept every offered shift,
cancelling accepted shifts without checking the agreement,
treating “casual” as meaning the employee can be dismissed at any time,
failing to monitor whether the work pattern has changed, and
relying on the contract label instead of the real working arrangement.
These risks can usually be reduced through appropriate agreements, accurate payroll systems and regular reviews.
FAQs
Is a casual employee the same as a part-time employee?
No. A part-time employee normally has ongoing employment and agreed or predictable hours. A genuine casual employee has no guaranteed work and can accept or decline individual offers.
Can a casual employee refuse a shift?
Usually, yes. The ability to refuse offered work is an important feature of genuine casual employment. Once a shift is accepted, the employee is expected to work it unless they are sick or another valid reason applies.
Can we require a casual employee to be available?
Be careful. Requiring availability may be inconsistent with casual employment and may trigger the availability-provision requirements in the Employment Relations Act. Get advice before including this type of clause.
How many hours can a casual employee work before becoming permanent?
There is no fixed limit. The issue is whether the pattern has become regular and whether there is an ongoing expectation of work.
Can we stop giving a casual employee shifts because of poor performance?
This can be risky. If the employment has become regular, removing the employee from the roster could be a dismissal. Even in a genuinely casual relationship, employers must not act for discriminatory, retaliatory or otherwise unlawful reasons.
How often should casual arrangements be reviewed?
Review them every three to six months, and sooner if the employee begins working regular hours. Compare the agreement with actual rosters, payroll records and the expectations of both parties.
Casual employment can work well when it is genuinely flexible and properly documented. Problems usually arise when the written agreement no longer matches what happens in practice. Employer Direct can help you choose the right type of employment agreement, review casual working arrangements and correct potential problems before they become employment disputes. If you would like help reviewing your casual employment contracts or addressing a dispute with a casual employee, get in touch today. Employer-Direct.co.nz | 0800 612 355
Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.
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