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The owner/employer of a Canterbury pub have been ordered to pay a penalty of $30,000 for wrongly treating permanent employees as casual, thereby failing to meet their minimum entitlements to holidays and leave.

While employees were able to pick up, drop and swap shifts with each other as they wished, and the employer argued that it considered they truly were casual employees, following a Labour Inspectorate investigation the matter was progressed to the Employment Relations Authority (ERA). However, despite the “casual” label, employees here actually worked on a continuing and regular basis, so that their employment was ongoing, even though it was mostly part time and there was flexibility as to work arrangements.

Employees had not been paid sick or bereavement leave, and holiday pay was unlawfully “paid as you go” with wages, rather than accrued, in breach of the Holidays Act 2003 (Act). Accrued alternative holidays for work done on public holidays was also “cashed up” and paid out, rather than being used as holidays, again breaching the Act.

It was noted by the Labour Inspectorate that the employer had opportunities to address some of the breaches before its investigation, but did not.

What this means for employers
Casual employment is not well understood by many employers, but with the now well resourced Labour Inspectorate and employees having better knowledge of their rights, significant risk exists where an employee is labelled “casual” but actually works on a regular or continuous basis. If employees are not provided minimum holiday/leave entitlements in this situation they can claim for these.  Employees who work regularly over time should generally be engaged as an “ongoing” employee, with an appropriate agreement reflecting this, even if they only work part-time.

Also, employers cannot safely “cash up” any holiday payments outside of the Act’s strict requirements around this, without risking penalties, and having to pay the holiday entitlements again as the Act provides.

For more information on ensuring you are using the right type of employment agreement, see our article here, as always, if you need advice to determine which agreement employees should be on please contact us.

Disclaimer: We remind you that while this article provides commentary on employment law topics, it should not be used as a substitute for legal or professional advice for specific situations.  Please seek guidance from your employment lawyer for any questions specific to your workplace.