Maybe you or someone you know already has a casual employment contract. More than 36% of Americans, nearly 57 million people, work in the so-called “Gig Economy.” As companies like Uber, Lyft, Amazon, and Grubhub have grown, the number of casual workers has grown too. For workers, these gigs are a “side hustle,” but for others, it is a way of life.
But what, exactly, is a casual contract? And what is the difference between a contractor and a casual employee?
We’ve previously talked about all different types of contracts. Here, we’ll answer all your questions about casual contracts.
A casual employee works for a business on an as-required basis. Businesses may offer work that casual employees may accept or turn it down. In some instances, a casual worker contract will set a minimum number of hours that an employee will be guaranteed each week. If there is no minimum set, this agreement may be considered a “zero-hours contract.”
A casual contract may be indefinite or limited to a fixed term. Importantly, a casual contract does not guarantee ongoing employment or future work. Because of this instability, employers may offer casual employees higher rates than usual.
Casual employees may be eligible for the same benefits as permanent employees, including annual leave and holiday pay. In the UK, employers may compensate for casual workers holiday pay not used by paying an extra 8% of a casual worker’s salary each pay cycle. In some parts of the US, part-time or casual employees may accrue paid time off. The regulations governing accrual vary by state, so employers should check with local authorities.
Casual worker contracts are most common in the hospitality and leisure industries. Many casual employees will work seasonally, for instance in mid-summer or around the winter holidays. Casual employees can help to cover surges in demand or take on projects that are outside a business’s normal purview.
Businesses enjoy the flexibility and economy of a casual employment agreement. With these contracts, businesses can call on the help of casual part-time employees as needed. However, these positions offer limited stability to employees. Let’s consider some of the pros and cons of a casual employment contract.
- Flexibility: Casual staff contracts provide flexibility for the employer as well as for the employee.
- Choice: For employees who value freedom, casual contracts offer choice. Casual employees get to choose what work to accept according to their own schedules. This makes it easier to plan around childcare and other obligations.
- Instability for employees: While some employees enjoy the nontraditional structure, others may find it difficult to plan their lives and their finances around an irregular work schedule.
- Instability for employers: Employers don’t have much control over casual employees. They may find themselves in a pinch if there is no one willing to undertake an urgent project.
There’s a lot to think about when putting together a casual contract. Here, we’ll address some critical concerns to think through before the fact.
- Independent contractor vs. casual employee
Lots of companies are currently squabbling over the differences between an independent contractor and a casual employee. However, an independent contractor is technically self-employed and will organize their own taxes and benefits. An employee, no matter how casual, will receive these and other services from their employers. The IRS has put out a handy guide asking about the nature of the relationship to help small businesses figure which they should hire.
Once they have workers correctly categorized, businesses can get started drafting a contract. With the help of online resources, such as our free casual employment contract template, this may be the easiest part.
Employers should be wary of any implied contracts they may be creating with casual employees. If a casual employee works regularly, the employment relationship may be “permanent.” It won’t matter what the contract says. Businesses will then be responsible for providing employees the same privileges they offer permanent employees.
When creating a casual contract, employers may wish to address the following terms and conditions:
- Term: Each contract should specify the term during which it is valid. This may be for a limited period of time such as a few months or a year, or indefinitely.
- Duties: Employers should be specific about their expectations for the employee and detail how they plan to evaluate performance.
- Hours of work: Specify, if relevant, the minimum number of hours each week employees work and the maximum.
- Compensation: A casual worker agreement will detail the salary or hourly rate of the employee. Employers must make sure contracts adhere to the minimum wage set out by the Fair Labor Standards Act.
- Termination: In the US, contracts default to “at-will” agreements unless otherwise specified. This means either employer or employee can sever the relationship at any point for any reason. Employers may wish to articulate this to avoid any confusion down the line. They can also set up any parameters of notice expected.
- Legal language: A casual worker contract has no teeth unless it has some legal jargon. Include clause saying that the contract qualifies as the sum of all previous discussions. Employers may also wish to specify governing law, that is, in which state they expect to settle any disputes.
For more information, be sure to check out our casual employment contract template.
So, you’ve used the casual contract template to draw up the perfect contract. To make a casual worker agreement official, employers can send it over to new employees anywhere in the world for a digital signature. Supervising casual employees means keeping track of a lot of moving parts, but managers can invest in software to track hours and keep track of paperwork. A casual employment contract should only be the first step of a long and fruitful relationship.
Written by Valerie Slaughter; Edited by Tanya Lesiuk