A recent Employment Relations Authority determination is a reminder that employers need to look beyond contractual labels to the true nature of the employment relationship.
When hours become regular and there are expectations of ongoing work, the law will treat the relationship as permanent – changing the employee’s entitlements under the Holidays Act 2003 and possibly making termination unjustifiable.
Stevenson v Mountain Chalets (2005) Limited
The employee Ms Stevenson worked as a cleaner for Mountain Chalets (2005) Limited (MCL). Ms Stevenson was on a casual employment agreement, however she consistently worked 20 – 25 hours per week, Mondays to Thursdays. MCL further expected her to be available to work regularly.
Ms Stevenson’s hours were reduced after a management reshuffle, and she was told that she would no longer have “guaranteed hours.” Ms Stevenson believed she had been dismissed, whereas MCL argued she had not. Ms Stevenson raised a personal grievance for unjustified dismissal.
In assessing the true nature of the employment relationship, the Authority considered:
- The regularity and predictability of Ms Stevenson’s hours.
- The mutual expectation of continuing work.
- The degree of control MCL exercised over her availability and duties.
The Authority determined that Ms Stevenson was a permanent employee, because:
- She had consistent hours of work, even during quieter winter periods.
- There was a mutual expectation of continuing employment.
- She was expected to request time off in advance.
- She often received texts from MCL expecting her to be available.
The Authority agreed that Ms Stevenson had not been formally dismissed, but that MCL’s actions in failing to communicate or meet with her, and not paying her annual leave, amounted to an unjustified disadvantage.
MCL was ordered by the Authority to:
- Pay Ms Stevenson $8,000 in compensation for hurt and humiliation.
- Recalculate and pay Ms Stevenson all outstanding annual leave for the duration of employment (five years).
This determination of the Authority is an important reminder that an employee’s reality must match the description of the employment relationship.
Key takeaways
- Regular predictable work is likely to create a permanent relationship, regardless of an employer describing the employee as casual.
- Keep arrangements under review – employers should revisit employment agreements where an employee’s patterns of work have become regular.
- Communicate changes to employees early and clearly – sudden reductions in hours or vague messaging to employees can damage or disrupt the employment relationship.
It is worth noting that changes have been announced for casual employment in the proposed Employment Leave Act. Our Employment Team has written this piece with more detail and other changes.
For assistance or more information on the above, please do not hesitate to contact a member of our specialist Employment Team.
