The use of casual and fixed term employees can be an effective tool to address peaks and troughs in the workload for your business. Utilising this type of employee is a great way to remain flexible and minimise your liability in terms of leave and superannuation.
A casual employee is someone that works for you on an irregular basis with no expectation of ongoing employment, and they will work normally on an ‘as and when required’ basis. The most important part of casual employment is that these employees need to be covered by employment agreements.
In developing an agreement for casuals, it is a good practice to include a clause on hours of work to include the fact that their workload will change often, how a casual employee will be advised of work, and that they are not obliged to make themselves available for work.
Just because an employee is on casual employment does not mean they miss out on basic entitlements such as annual holidays. It does, however, get difficult to calculate the four weeks’ entitlement which is given to other types of employees.
If the employee’s employment pattern is so intermittent or irregular that it isn’t possible or practicable to attempt to provide four weeks’ paid annual holidays, the employee may be paid annual holiday pay with their regular pay (ie on a paid-as-you-earn basis) provided that it is not less than 8% of the employee’s gross weekly earnings. In other words, to compensate for them not earning annual leave, you may wish pay an extra 8% of their salary or wage each pay cycle. This is not a requirement but an option as working out an entitlement for an employee’s four weeks’ annual leave may not be practical in certain circumstances. The annual holiday pay is paid as an identifiable part of the employee’s pay (and on their payslip).
The employer should review the work pattern often to see if a regular cycle of work has developed. If this happens, the employer and employee should enter into a new employment agreement that provides for annual holidays to accumulate, and that removes the 8% payment. If a regular pattern of work has developed but the employer continues to pay the 8% annual holiday pay for 12 months or more, then the employee will become entitled to paid annual holidays, and any amount already paid on a paid-as-you-earn basis cannot be deducted.
In addition, casual employees are entitled to sick and bereavement leave after six months of working with you if, over the six months, they have worked an average of at least 10 hours each week and at least one hour a week or 40 hours a month.
Casual employees have the potential to be deployed with great success in your business, however you need to manage their entitlements properly. For advice and support call Employsure on 0800 675 700.