Chossing between Permanent, Fixed-Terms, and Casual Employees

Three types of employment exist in New Zealand:

Permanent. No fixed end date. Continues until either party ends the relationship. The default for any ongoing role.

Fixed-term. Ends on a specified date or when a specific event occurs. For genuinely time-limited work, like covering parental leave, completing a defined project, or seasonal work with a clear end.

Casual. For genuinely irregular and intermittent work where neither party expects ongoing employment. Casual employees are employees. They have employment agreements, they're entitled to minimum wage, holiday pay, sick leave, and the protections of employment law. 

The type you choose must reflect the reality of the work, not the most convenient option.

Permanent employment

No fixed end date. The employment continues until either party ends the relationship, with appropriate notice, or through a fair process in the case of dismissal.

This is the right choice for any role that's genuinely ongoing. Permanent employees can be full-time or part-time, and both have the same entitlements. The hours are different, the rights aren't.

The default position When in doubt, permanent is the safer choice. Using casual or fixed-term arrangements to avoid permanent employment obligations is one of the most common (and expensive) mistakes small employers make.

Important: zero-hour contracts are illegal Permanent employment agreements must include guaranteed hours of work. New Zealand prohibits "zero-hour" contracts, where an employee has no guaranteed hours but is required to be available. The only exception is genuine casual employment (see below). For more on contracted hours, availability clauses, and shift cancellations, see our blog: Contracted hours, availability clauses and shift cancellations.

Fixed-term employment

Ends on a specified date or when a specific event occurs. Covering parental leave, completing a defined project, seasonal work with a clear end: these are all legitimate fixed-term situations.

You must have a genuine reason Fixed-term can't be used to avoid giving someone the security of permanent employment. The genuine reason must be recorded in the employment agreement.

If the genuine reason disappears If the person on parental leave decides not to return, for example, the fixed-term arrangement may need to convert to permanent employment.

Same entitlements apply Fixed-term employees have the same entitlements as permanent employees throughout their employment.

Casual employment

Casual employees are employees. They have written employment agreements, they're paid at least minimum wage, they get KiwiSaver if they've opted in, they're entitled to leave (with some specific rules around how it accrues, covered below), and they have the same legal protections as any other employee.

What's different about casual is the pattern of work: genuinely irregular and intermittent, with no expectation of ongoing employment. You're not obliged to offer work, and the employee isn't obliged to accept it.

Casual is the most misused employment type in New Zealand, and the misuse creates real legal risk.

Genuine casual looks like:

• No guaranteed hours or shifts
• Shifts offered as needed, accepted or declined freely
• No regular pattern develops over time
• No expectation of ongoing work from either side

Casual in name only looks like:

• Someone who works every Tuesday and Thursday
• Someone rostered consistently week after week
• Someone who's been part of your regular team for months
• Someone you'd describe as "part of the crew" without a permanent agreement

If a pattern develops If a pattern of regular work develops, the Employment Relations Authority can look past the agreement and find the person is effectively permanent, regardless of what the contract says. This happens regularly. For a deeper look, see our blog: Casual Employment Arrangements.

Casual entitlements

What casuals are entitled to

Because casuals are employees, they have the same minimum entitlements as any other employee. The specifics of how some of those entitlements work are slightly different given the irregular nature of casual work, but the entitlements themselves are the same.

Annual leave Can be paid as 8% of gross earnings on top of each pay instead of accruing in the usual way, but only if agreed in the employment agreement and shown as a separate line on every payslip. It cannot be bundled into the hourly rate.

Sick, bereavement, and family violence leave After six months of continuous employment, meeting the minimum hours requirements.

KiwiSaver Casual employees are exempt from automatic enrolment, but if they've opted in to KiwiSaver, employer contributions apply from their first pay, at the same rate as for any other employee.

Public holidays If the employee works on a public holiday, they're entitled to time and a half. Whether they're also entitled to an alternative holiday depends on whether the public holiday falls on what would otherwise have been a working day for them, which requires assessing their actual work pattern. This is the most complex area of casual entitlements. Employment New Zealand publishes factors for deciding whether a day is an 'otherwise working day'.

Minimum wage and breaks Apply in exactly the same way as for any other employee.

Ending a casual arrangement

Ending a casual arrangement still needs to be fair and lawful.

Accepted shifts can't be cancelled without good reason Once a casual employee has accepted a shift, it has the same protections as any other employee's shift. It can't be cancelled at the last minute without proper cause or compensation.

Repeatedly stopping work can trigger a grievance If an established pattern exists and you repeatedly stop offering shifts, the employee can raise a personal grievance.

Get advice first if you're unsure If the arrangement has gone on for a while and you're not sure how to end it, get advice before acting. Employment New Zealand's casual employees page is a sensible starting point.

Getting it right

The classification decisions you make at the beginning shape every obligation that follows: the taxes you file, the leave that accrues, the process you'd need to follow to end the arrangement.

Getting this right isn't about picking the most convenient label. It's about understanding the work that's actually being done, and matching the legal arrangement to that reality. Do that at the start, and most of what follows takes care of itself.

Further reading

• Employees vs Contractors: A Small Business Owner's Guide, PaySauce
• Casual Employment Arrangements, PaySauce
• Contracted hours, availability clauses and shift cancellations, PaySauce
• Employee or contractor?, Employment New Zealand

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