There are several different types of employment in New Zealand, and it can be easy to get confused between the different types. In New Zealand, most workers are either permanent, fixed-term or casual. While employees might be full-time, part-time, or something else; they will still in most cases have an employment agreement with a permanent or fixed-term classification. This article will explore:

  • the main types of employment;
  • how to distinguish them from each other; and
  • what the implications are for you as an employer in each case.

Permanent Employees

Most employees in New Zealand are permanent employees and have the full set of employment rights and responsibilities set out in New Zealand law. Permanent employees, as the name indicates, have no time limit or otherwise on their employment contract. Instead, it carries on until the employee or you as their employer terminate the contract. Permanent employees can work either full-time or part-time.

In terms of your obligations as an employer to permanent employees, you should be aware that employees sometimes have to meet certain criteria to qualify for entitlements like annual leave or sick leave.

Often, an employee has to work for six or twelve months for a business before being entitled to those leave allowances.

However, many businesses use an informal front-loading system. This allows staff who fall sick before they have sick leave entitlements to ‘borrow’ future sick leave to take that time off. As an employer, you are still under good faith obligations to look after your employees and so the government encourages this kind of scheme.

Fixed-Term Employees

A fixed-term employee, also known as a temporary employee, is a worker whose employment with your business will end on a specified date or when a particular event occurs. 

You treat them as permanent staff in terms of employment rights and obligations. Except that their employment ends on a particular date and the rights and obligations generally end with it. Common reasons for you as an employer to hire a fixed-term employee would be:

  • to replace another employee on parental leave;
  • as cover for a seasonal peak; or
  • to work on a project.

Importantly, there must be a genuine reason based on reasonable grounds for the fixed-term contract, and the employee must be told about this reason.

You cannot use a fixed-term agreement, for example, to test whether or not an employee is right for the job. This is not a genuine reason for a fixed-term contract in New Zealand.

An example of a genuine reason for a fixed-term contract is if the fixed-term employee was covering for another employee on parental leave. In this situation, the fixed-term employee’s employment agreement should specify that in the event that the employee on parental leave returns to work early, the date of termination of the fixed-term agreement will also move forward.

Casual Employees

While there is no legal definition of what a ‘casual employee’ is, the term usually refers to a situation where the employee has no guaranteed hours of work and no ongoing expectation of employment. As the employer, you do not have to offer work to a casual employee, and the employee does not have to accept work if you do offer it to them. A casual employee can work flexibly, whenever it suits both them and you as their employer.

Employers look for casual employees often when it is hard to predict when the work needs to be done, or when the work needs to be done quickly.

Every time a casual employee accepts an offer of work, it is treated as a new period of employment. If you employ someone to do casual work, this must be made clear in their employment agreement.

Employment rights and responsibilities still apply to casual employees, but the way in which you apply annual holidays and sick leave can vary for these employees. This often depends on how much and how often they end up working for your business.

Key Takeaways

There are three main types of employment in New Zealand: 

  • permanent;
  • fixed-term; and
  • temporary. 

Permanent staff are full employees with all rights and responsibilities set out in New Zealand law. Their contracts do not end until the contract is terminated, either by the employee themselves or the employer.

Fixed-term employees are similar to permanent employees but their employment is only for a given period of time. There must be a genuine reason to have a fixed-term contract.

Casual employees are a specific type of flexible worker, where there is no guarantee of ongoing work. There is also no obligation on the worker to necessarily agree to accept work offered. If you want to know more about the different employment types, contact LegalVision’s New Zealand employment lawyers on 0800 005 570, or complete the form on this page.

Frequently Asked Questions

What is a permanent employee?

Permanent employees are the most common type of employee in New Zealand and can be either full-time or part-time. Their employment only ends when their contract is terminated, and they have a full set of rights and responsibilities.

Can part-time staff also be permanent, or do they have to be casual?

This is a common misconception. Part-time staff can certainly be employed on a permanent basis. They can, also, be employed on a fixed-term or casual basis depending on the role. 

What is a fixed-term employee?

A fixed-term employee has the same set of rights and responsibilities as a permanent employee, but only for a set period of time. They may be covering parental leave or completing a project.

What is a casual employee?

A casual employee has no guarantee of any work and is not compelled to accept any work when it is offered. This is typically a loose arrangement for unpredictable or seasonal work.

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