How much freedom do employers have to employ people as and when they need them?
This question came up during our recent Book Group discussion about George Orwell’s 1984.
We were talking about the power of the state, and its control over people’s lives. Karin said the Employment Relations Act 2000 has had a huge impact on her business, and it has greatly reduced her flexibility in employing people. Some thought this wasn’t a change for the better, and that it gives weight to Orwell’s predictions. Others said we should focus on the increased rights and benefits that employees now have.
Neil, who owns a clothing factory, said he was finding the compliance costs of using permanent employees so high that he was considering a pool of regular casuals instead. He had heard they had fewer rights and entitlements than permanent employees, didn’t need proper employment agreements, and he wouldn’t have to pay them for public holidays, annual or sick leave. He could take them on as and when needed, with no need to issue warnings if they weren’t any good.
I couldn’t keep silent, as he wasn’t entirely correct. I explained that he cannot label an employee a “casual” unless that person can genuinely turn down work each time it is offered. In addition, work can be offered only on an intermittent basis and each casual will typically have no commitment to a continuing relationship with the business.
If these factors are met, the key terms of each casual’s employment still have to be recorded in writing. Neil should check the Employment Relations Act 2000 for the terms. He has to explain why the person is a casual, and that each engagement will be a one-off, with no continuing employment relationship.
Also, casuals (as with all other types of employees) must be given their employment terms in “draft” before their employment begins, and informed they have a reasonable opportunity to seek independent advice about them before signing.
I warned Neil to use a letter or employment agreement designed for casual employees, and not just adapt a permanent employee’s agreement. I have seen employment agreements for casuals that say they will have an annual performance review!
Neil asked what had happened to spontaneity. I said that he could be as spontaneous as he liked once his paperwork was in order.
When Neil has signed up his pool of casuals, provided they don’t take on so many assignments that they become a part of the regular workforce and have regular days and hours of work, or go on a regular roster, he is correct that in most circumstances they won’t be entitled to paid holidays or leave.
Instead of paid annual holidays, at the end of each assignment they get holiday pay of 6 per cent of their gross earnings. If they agree, and it is recorded in their employment agreement and clearly identifiable, they can have their holiday pay paid with their wages.
They will be paid for a public holiday (at the rate of time and a half) only if they work on the public holiday.
They won’t qualify for paid sick or bereavement leave unless over a six-month period they work an average of at least 10 hours in every week, and not less than one hour in every week or not less than 40 hours in every month.
If Neil finds that a casual isn’t performing, he can’t dismiss them mid-assignment unless he goes through a warning process. He can, however, decide not to offer them any work in the future.
Finally I pointed out that casuals have no obligation to come back to work for Neil if he wants them. Only a worker on a permanent employment agreement has to do that.
By Penelope Ryder-Lewis, first published in The Dominion Post