Employment 101: Common Questions in Employment

QCL Lawyer Tina Hwang answers some common questions in regards to Employment Law.

What is the difference between a casual and permanent employee?
There is no statutory definition of “casual” employees. A Casual employee is normally hired to do specific work for short time periods and works on an “as required” basis. If a worker is genuinely casual, they cannot have an expectation of ongoing employment and should only work when required on irregular and/or intermittent times. The casual employee cannot have a regular work pattern and the employment should terminate after each project/term.

A casual worker can later become a permanent part-time or full time employee if the times that the casual worker works becomes regular. The employer has an expectation that the employee will be regularly available, and the employee has an expectation of ongoing employment. The parties should at this point sign a variation or new employment agreement to document the change.

A worker does not necessarily become “casual” because they work shifts “on-call”. Many hospitality workers work varying shifts, but they are permanent workers entitled to all the normal sick leave, bereavement leave, annual leave and public holiday leave. There is a common misunderstanding in practice that a staff member can be considered “casual” if they work less than 20 hours a week or if they work shifts. Both employers and employees should be careful. Simply labelling an employee “casual” does not mean they will automatically be considered casual.

A genuine casual worker would normally be paid more than the market to compensate them for not being entitled to basic leave entitlements or having guaranteed work in the future and be paid 8% of their wages representing 4 weeks annual leave holiday pay.

Who is entitled to public holiday pay?
All employees are entitled to public holiday pay regardless of whether they are paid a salary. Some employers believe that the salary covers all holidays. However, if the employee works on a public holiday, they need to be paid at time and a half and be given an alternative holiday in lieu. If a casual worker works on a public holiday, they need to be paid time and a half, but would not be entitled to an additional holiday.

If the workplace closes on a public holiday and the employee had an expectation to work on that day because it is a day that they would have otherwise worked, the employee should still be paid for that day. However, a casual employee by definition, work as and when required and have no expectation of ongoing employment, so a casual worker could not ever be expected to have worked on a day the workplace closed, and would therefore not be entitled to pay for a closed day. For example, if the workplace is closed for Good Friday and Peter works Monday to Friday, Peter would be paid for that Friday. If Bob normally works Thursdays and Fridays, then Bob should be paid for the Good Friday the workplace is closed. However, Jack who normally works Mondays to Wednesdays would not be entitled to be paid for the Good Friday close down as he did not expect to work on this day. If shift workers work some Fridays and under their regular shift, they would have “normally worked” on that particular Good Friday, then the shift worker would be entitled to pay. The term “would have otherwise worked” can get tricky with shift workers and you must look at any patterns or reasonable expectations the employee may have had for that day.

What is the difference between a contractor and an employee?
An independent contractor is not an employee covered by section 6 of the Employment Relations Act 2002 (“the Act”). A genuine contractor would not be entitled to protection under the Act. There is a string of complicated case law examining whether a party is a contractor or an employee. The Courts generally do not care what the parties called the worker and will generally look at “the intention of the parties at the time the contract was entered into.”

The Court has held that an employer/ principal paying the PAYE of the worker is not necessarily determinative that the worker is an employee. In examining the true relationship, the Courts will generally look at:

  • Control (whether the worker was continually under the control and supervision of the employer/principal);
  • The rate of pay (set hourly/weekly rate or per unit/production);
  • Entitlement to overtime or penal rates;
  • Flexibility on working hours;
  • Where the worker works;
  • Whether the worker does the same job as others who are employees of the employer/principal;
  • Whether the worker is doing/prevented from working for others;
  • Whether the worker has to follow the employer/principal’s rules and procedures;
  • Whether the worker use their own tools, assets, provide or pay for their own training;
  • Whether the worker pays their own ACC and tax; and
  • Whether the worker is GST registered and invoices for works.

The determination is “intensely factual” and there have been cases where the Authority makes a decision that is reversed by the Employment Court, which is then reversed by the Court of Appeal then later reversed by the Supreme Court.

Parties should be mindful of these complications when purporting to enter into a contract for services with an independent contractor when there are employment elements in the mix. The employee could later bring a personal grievance claim under the Act against the employer even when the parties initially called the worker an independent contractor.

These are just some of the common questions that arise in the workplace and we therefore always recommend all parties to seek legal advice before signing any contracts.

Please feel free to contact Tina Hwang at Queen City Law for further information.