Unjust dismissal of casual employee, don't make this mistake

Published 4 July 2024 | 2 min read

Employers often believe that hiring an employee on a casual contract absolves them of many employment obligations, including the risk of unjustified dismissal claims. However, this assumption is flawed and can lead to significant legal and financial consequences. Recent determinations by the Employment Relations Authority (ERA) highlight that even casual employees have protections under New Zealand employment law.

The significance of caution

Casual employment arrangements are commonly understood to offer no expectation of ongoing work beyond each agreed shift. Yet, when an employer commits to a series of shifts, this can form a period of engagement similar to a fixed-term contract. Ending this engagement prematurely without adhering to proper procedures can be deemed unjustified dismissal.

ERA case study

A recent ERA case underscores this issue vividly. The case involved a casual employee who was unjustly dismissed during a training period. Key findings from this case include:

• Casual agreement: The employee was hired under a casual agreement and was offered shifts over an eight-week training period.
• Premature dismissal: The employer dismissed the employee after three weeks due to perceived performance issues, providing him with a letter stating that his training would not continue.
• ERA determination: The ERA determined that, despite the casual nature of the employment, the agreed shifts constituted a period of engagement. Thus, the dismissal process had to comply with the standards of fairness and reasonableness.
• Remedies ordered: The employer was ordered to pay the employee lost wages for the remaining five weeks of the training period and $20,000 for hurt and humiliation.

Proper dismissal practices

This case illustrates the importance of adhering to fair dismissal procedures even for casual employees. By doing so, employers can avoid costly penalties and maintain a positive workplace reputation. Additionally, proper handling of dismissals fosters a culture of fairness and respect, which can enhance employee morale and retention.

How to avoid a situation like this?

To prevent unjust dismissal claims and ensure compliance with employment laws, employers should implement the following best practices:

Clear casual agreements

Ensure that casual employment agreements explicitly state that each shift or series of shifts constitutes a separate period of engagement. Clarify that there is no expectation of ongoing employment beyond each agreed shift.

Fair dismissal procedures

Treat the termination of any period of engagement with the same procedural fairness as a permanent or fixed-term employment. This includes providing adequate notice, documenting performance issues, and offering the employee an opportunity to respond.

Consistent communication

Maintain clear and consistent communication with casual employees about their work expectations, performance, and any issues that may arise.

Training and Resources

Provide training for managers and HR personnel on the legal requirements and best practices for managing casual employees, including proper dismissal procedures.

New Zealand employers can safeguard against unjust dismissal claims and cultivate a fair, compliant, and positive working environment for all employees, regardless of their contract type.