Casual and part-time work can be a fantastic arrangement for both employer and employee alike. In today’s fast-growing “gig economy,” it’s becoming more and more common to see part time and casual work arrangements on payrolls of businesses here in New Zealand and further afield.
What does this mean for payroll?
To best position yourself for a future where people are shaping their work arrangements to fit their lifestyles, interests and identities outside of a typical 9-to-5 role, let us talk you through a guide to payroll for casual and part time employees. We’ll cover the types of employment we have in New Zealand and the different regulations to be aware of, the key difference between part time and casual employees (and why you can’t confuse them), as well as your obligations as an employer to manage leave entitlements and holiday pay for your employees.
Smart Payroll makes the process as smooth as possible, whether you’re using our payroll software for small business, or HR software within a larger operation. Let’s get into it!
What types of employees are there?
Let’s go through the different types of employment and how to work out the best arrangement for your new employee before the employment agreement is drawn up.
Permanent employees (full-time or part-time)
On the official Employment New Zealand website, permanent employees (whether full-time or part-time) are the most common type of employee in New Zealand. They have full employment rights and responsibilities. Some employment entitlements are subject to criteria the employee has to meet, like parental leave, parental leave payments, annual holidays, sick leave and bereavement leave. Full time and part time employees in the same business may have small differences in these entitlements due to their work patterns.
Employment legislation in New Zealand doesn’t stipulate the exact hours needed to be full-time or part-time, but full-time is generally accepted to be between 30 and 40 hours per week, and part-time being 30 hours or fewer. Both full-time and part-time employees have the same employment rights and responsibilities, and are entitled to four weeks of annual leave per year.
The Employment New Zealand website shows an example of a full-time employment arrangement compared to part-time one: “A full-time permanent employee might be someone working 9am to 5pm, five days a week. An example of a part-time permanent employee is someone who regularly works the same 3 days a week for eight hours each day, for a total of 24 hours a week.”
Fixed-term means temporary employment. This means a term of employment has a specified end date. A fixed-term contract may be used if an employee comes in to cover parental leave, to work through a peak season period, or to provide extra resource on a project.
Fixed-term employees also share the same employment rights and responsibilities as permanent employees except that the employment will come to a close at the end of the fixed term. The key thing to be aware of if you want to hire someone on a fixed-term contract is the need for a genuine reason, based on reasonable grounds for the fixed term. For example, the new employee may be on a fixed term contract as they’re covering another employee while they’re on maternity leave, from X to Y date. The employee must be told about the reason. If the employment agreement does not state when and how the employment agreement will end, and the genuine reason for the fixed term, the employee might actually be considered a permanent employee under law.
Most commonly used in industries involving the harvest or catching of fruit, vegetables, fish, seafood, and meat, seasonal employment involves an agreement between employer and employee that when the season has come to a close and the employee’s skills are no longer needed, the fixed term will end. In some instances, the same employee can continue work each season, making it a rolling fixed-term contract. In this case, the employer and employee clearly know when the contract rolls over.
It’s all in the name really — casual employment is the agreement between employer and employee that the employee “has no guaranteed hours of work, no regular pattern of work, and no ongoing expectation of employment.” It’s good for an employee who wants no commitments. They don’t have to accept work if offered it, and the employer has no obligation to offer work. A new offer of employment is extended to the employee each time they accept an offer of work.
Legal requirements for employee contracts
By law, you need to have an employment agreement for each employee you engage to work for you. This is a requirement by law. Smart Payroll has a SmartHR tool to help you build an employment agreement, for all worker types, crafted by our expert employment lawyers. Our new hire onboarding process and checklist saves you time and ensures you don’t miss critical steps in the onboarding process. It also helps you stay on top of the induction processes to get your new hire up to speed with all the important information so they’re ready to hit the ground running.
What’s the difference between part-time and casual employees?
This part is super important to be aware of.
A part-time worker is someone with all of the rights and responsibilities of a permanent employee. If they moved from part time to full time, the only thing that would change is the amount of hours you pay them for. They are also entitled to four weeks of annual leave.
Casual workers on the other hand are “on call” for when you need them, but have no obligation to accept the work you offer. A casual worker can also work for fixed hours for a short-term contract, but the contract must be for less than one year to fit the “casual” criteria.
I have casual employees — what are their leave entitlements?
Casual workers are entitled to holidays — as well as sick leave (after 6 months), bereavement leave (after 6 months) and statutory holidays (effective immediately).
Or, you can come to a different agreement: instead of accruing annual leave, casual workers can be paid 8% on top of their wages as holiday pay, every payday. Alternatively they can accrue the value like a part-time worker would and be paid out their 8% on termination.
What if my fixed-term or part time employee becomes permanent?
If your fixed-term or part-time employee becomes permanent within 12 months of beginning employment, their 8% rate will cease and 4 weeks of annual leave begins. If you hire a casual worker and pay them 8% of their income as holiday pay, and the employee stays for longer than a year, they are then entitled to the 4 weeks paid holiday — if you have been paying the employee under the 8% arrangement all year, you may end up paying them for the 4 weeks leave on top of this. As our guide says, err on the side of caution and if there is any doubt, make them part time.
If you have any questions about these obligations, you can call Employment Relations to discuss your query.
Use Smart Payroll software
For part time and casual employees, Smart Payroll makes the process easier to get right — because we do the important parts for you!
We give your employees autonomy to fill in their own timesheets, ensuring their hours will automatically appear in SmartPayroll ready for you to check the hours and pay them. It cuts down on hassles so that you can spend time on other important matters – growing your business!
One Touch Pay is our super fast online payroll functionality that lets you pay staff in less than a minute, including lodging PAYE with IRD. How easy is that!
Should you be out of office, Payroll On The Go lets you process your payroll from anywhere, on any device.
For workers who have unconventional working arrangements and hours, being able to access their payroll details and have visibility over payslips and leave balances is important. And it’s one less thing you need to be across. MySmartPayroll is a secure employee mobile payroll app that means peace of mind for you and your team.
Are you ready to smarten up your payroll? Get in touch with our expert team!
Extra for experts: Smart Payroll new employee guide
Here at Smart Payroll we understand the excitement of making your first hire. We also understand how important it is to make sure you’re set up properly from the “get go.”
That’s why we created an Employer’s Handy Guide to make sure you’re properly documenting and fulfilling your legal obligations when it comes to building your team. From the first step, making sure you’ve got a folder for each employee with their employment contract, IR3330 tax code declaration form, and KS1 and KS2 Kiwisaver forms; to making the distinction between employee, contractor, part time and casual workers; ACC; leave; and payroll software; the guide is essential reading for employers. We show you how easy it is to get started with new employees on Smart Payroll and to make sure you’re doing the right thing — by the law as well as by your team.