• Get the basics right overview
• Pay
  • Annual holiday pay for casual workers
  • Calculating annual holiday pay
• Holidays and leave
  • Annual holidays
  • Public holidays
  • Paying public holidays correctly
  • Employees ‘on call’ on public holidays
  • Sick leave
  • Bereavement leave
  • Parental leave
• Breaks
• Provide a safe and healthy workplace

Annual holiday pay for casual workers

If you employ people who have an intermittent or irregular work pattern for genuine casual work, you may be able to pay out their annual holidays on a ‘pay-as-you-go’ basis. This means you can pay them 8% of their gross earnings as holiday pay on top of their wages.

Generally casual employees are also entitled to annual holiday pay, however their entitlements may be met differently to that of a full time employee. This will depend on the nature of the relationship with the employer. You can find further information on casual employees’ entitlements here.

What is a genuine “casual employee”?

It’s important not to confuse part-time employees with casual employees. Many employees who are described as ‘casual’ are in fact part-time employees with a clear employment pattern. For example, supermarket or hospitality employees whose work pattern is established on a fortnightly roster. These employees are entitled to four weeks’ annual holidays.

In some cases, however, there isn’t such a clear work pattern. Generally, these are people who you employ for a special job that you can’t always anticipate or whose work pattern is so irregular or intermittent that you can’t provide them with four weeks’ of annual holidays.

For example:

• a retired employee who is called back in emergencies to cover for sickness.
• a specialist tradesperson who is employed only when a particular process, such as repairing a broken machine, is required.

What you must do

• You must agree with the casual worker that each pay day you’ll add at least 8% of their gross earnings as annual holiday pay. This is known as a “pay-as-you-go” arrangement.
• Include the “pay-as-you-go” arrangement in their employment agreement.
• Show the 8% annual holiday pay as a separate and identifiable amount on the employee's pay slip, so there is no confusion about what it represents. It is also good practice to show the separation of pay in your wage and time records for the employees.
• Review for any “regular cycle” change. If you see that a regular cycle of work has developed you’ll need to agree with your employee to stop the 8% payment and sign a new employment agreement that gives the employee the normal four weeks’ annual holidays.  If you don’t agree to stop the pay-as-you-go arrangement when a regular work pattern happens, you can still be required to give your employee the annual holidays entitlement even if you have been paying 8%.

When the employment relationship ends, no additional pay is due to the employee for annual holidays because it has been paid out with their normal pay.