The Employment Relations Authority has upheld a personal grievance for unjustified dismissal of a worker following confusion over the status of his employment agreement.  The employee alleged that he was a permanent employee, while the employer alleged that the employee was on a casual employment agreement.

The employee’s claim of a permanent position failed as he accepted that he knew the employment would end when a full time employee was found for the job.  He also knew that he was able to apply for the full time position but decided not to.

The employer’s position that the employment was casual also failed, despite being called a casual employment agreement in the written document.  The fact that it was called a casual employment agreement was the only factor pointing to it being casual, as the employee was obliged to work and had no right to turn down work on a particular day.

The Employment Relations Authority found that in fact the employee was on a fixed term employment agreement, but the requirements of the Employment Relations Act as to fixed term positions were not complied with.  Therefore the employer could not rely on the fixed term nature of the agreement to bring the position to an end.  The employee was therefore unjustifiably dismissed and was awarded $7,700 for lost wages.  In an interesting twist the ERA refused to award any other compensation for the dismissal, as it held that the employee knew the position was going to come to an end and he gave no evidence as to any hurt and humiliation suffered despite claiming $15,000 on that matter.

It is important for employers to get the status of employees correct and to comply with the legal requirements for each possible status whether it’s casual, fixed term or permanent as a failure to do so will result in substantial awards for any lost wages and usually for hurt and humiliation.

In the various sectors of the industry (growing/harvesting/transporting/processing/marketing/ wholesale/hospitality etc) it is necessary to rely on a range of different types of employees to get the job done.  Employers want flexibility in how they hire staff, to meet the needs of the business as, and when, the needs of the business arise.

Employers in seasonal industries will know only too well, how the business’s needs change from one season to the next, and they want to know they have the staff they need without being over staffed in the quiet seasons.  The need for flexibility extends to café and bar owners, retailers, and brewers too. Knowing more about the types of employment contracts can help employers to make the right decisions for their business when it comes to hiring staff.

Permanent employees

These Employees can be either full-time (working 30 hours per week or more), or part time. You cannot terminate a permanent Employee unless you have good reason to do so (for instance poor performance, misconduct, or redundancy).  You must also follow a fair process in coming to any decision which might negatively impact on the Employee. If an employer terminates a permanent employee without good reason, or without following a fair process the employee might be entitled to compensation. 

Currently the law allows all employers to make new permanent employment offers subject to a 90 day trial period (so long as the employee has never been employed by the employer before).  The employer can terminate the employment for any reason within the 90 day trial period, and the employee cannot raise a personal grievance for unjustified dismissal.  The employee can however still raise a personal grievance for things like discrimination or unjustified disadvantage.  

These employees typically qualify for 4 weeks’ of annual leave, 5 days of sick leave, as well as bereavement leave and parental leave, after being employed for a set period of time (which is set out in legislation).

Casual employees

These employees are great for filling in gaps in staffing on an ad hoc basis where the workload is unpredictable.  Casual Employees are usually paid their holiday pay on an 8% “as-you-go” basis.  Employers can offer work to casual staff as the need arises, but they have no obligation to continue offering work.  This provides flexibility, but there are some pitfalls to keep in mind. 

One downside of relying on casual staff, is that these employees have no obligation to accept work when it is offered.  That means that unless the employer has other casual staff to call on, the employer could be left in the lurch. 

The second potential pitfall is that casual staff who are relied on frequently could become permanent staff without the employer intending to keep them on indefinitely.  A casual employee can become a permanent employee, regardless of what is explicitly stated in an employment agreement, if the employee works regular hours to the point that there is a mutual expectation that work will be offered and accepted. 

Typically too, casual Employees do not qualify for sick leave or bereavement leave because they have not worked for the employer for a six-month period or do not work for an average of at least 10 hours per week.

Fixed term employees

Fixed term employment has a defined start and end date. This type of employment is perfect for foreseeable, but not non-permanent staffing needs, like filling in for a staff member on maternity leave, getting someone to help out on a short term-campaign, or to do seasonal work.  The end of employment can be defined by a calendar date, or upon a fixed event (for instance, at the completion of a project). Like permanent employees, you cannot terminate their employment unless there is a good reason to do so and unless a fair process is followed.

In order to have an Employee on a fixed term agreement, you need to have a genuine business reason (testing their suitability is not regarded as a genuine reason). The reason must be recorded in the employment agreement.

Fixed term Employees can also be paid holiday pay on an ‘as-you-go’ basis at 8% in some circumstances, such as if the agreement is for less than 12 months. Like casual employees, fixed term employees may qualify for sick and bereavement leave after 6 months of employment while working an average of 10 hours per week.

Employment agreements

It is a requirement in New Zealand that all employees be provided with a written employment agreement. In addition, the employer must keep on file a copy of every draft agreement offered to staff for them to consider.