How to convert a temporary employee to permanent staff
Are you considering converting one of your casual staff into a permanent position? Many New Zealand companies utilise their temporary workers and promote them to full-time roles as the business evolves. Often, promotion within the company is better than recruiting an external hire to fill a full-time position.
The Employment Standards Legislation Act provide a framework for companies to convert a casual or temporary employee into a permanent one through a process called "casual conversion."
Here are some steps to take if you are considering making your temporary staff permanent.
1. Check eligibility
Check if a casual employee is eligible for casual conversion. The Employment Standards Legislation Act provides a pathway to casual conversion. The standards state that an employer can convert a casual employee to a permanent one if the casual worker has:
- Been employed by the same company for a minimum of 12 months.
- Established a consistent work schedule with regular hours.
To meet the 'regular pattern of hours' requirement, a casual employee's work schedule must have remained consistent throughout the entire 12-month period.
If a casual employee satisfies the eligibility criteria, they can submit a request to transition to full-time employment on or after completing 12 months of service.
Note that small business employers are exempt from the obligation to offer casual conversion to their employees.
2. Conduct a review
It is recommended to conduct an appraisal of the casual employee before determining their eligibility to convert to a permanent hire. When evaluating an employee's performance, consider the following factors:
- How long has the employee been with the company?
- What is the nature of their role and responsibilities?
- Have there been any gaps or breaks in their employment during this period?
- Has there been any noticeable risks of co-employment?
Consider the merit of the casual employee
It’s important to evaluate the employee on merit. Even if a team member is eligible for promotion, they may not be a suitable candidate. Prioritise performance over tenure. Are there any performance concerns that need to be addressed? Consider whether the temporary worker has the endurance, capacity, and long-term potential to sustain their role over an extended period – while excelling on a permanent, full-time basis.
Continuing need
A temporary worker's role is typically tied to a specific need. Assess whether the role currently filled by a casual employee necessitates a full-time position. Just because a temporary worker is eligible for "casual conversion" doesn't mean it is in the business’s best interests to convert their role into a permanent position.
Forecast whether the role will be needed on a long-term basis and if there’s a budget allocation for the position. Consider all circumstances prior to making a decision.
3. Adhere to relevant industrial instrument
The Employment Standards Legislation Act in New Zealand provides a framework for employers to utilise when contemplating a casual conversion. Ensure the conditions in the Standards are completed before proceeding with a conversion. Adhering to the Standard and the prescribed checklists minimises the risk for potential disputes.
4. Consider operational changes
When deciding to convert a temporary worker to a permanent position, you must assess the operational adjustments needed within the company to accommodate the change.
Here are some factors to consider when assessing the viability of a casual conversion:
- Workforce planning: Consider the overall demands of the business.
- Existing and upcoming projects: Is there enough activity in the pipeline to assign resources to a casual worker? Will they be working on a specific project?
- Align workforce needs: Determine if the role eligible for casual conversion is the most critical one to fill permanently.
- Budget: You must consider the costs relating to employees working more hours.
- Plans to scale down: If the business is planning to scale down, consider whether adding permanent staff would be counterintuitive to this goal, and if alternative staffing arrangements might be more suitable.
5. Notify the employee
Formally notify the employee of their casual conversion, obtaining their consent:
- Provide a written notice outlining the reasons for the contract change.
- Ensure the employee agrees to the new terms.
- Note that the employee may opt for part-time employment instead of full-time, if preferred.
6. Offer a permanent contract
Employers need to formalise a casual conversion with a contract (or other written agreement). Make sure to have the offer documented in writing. The stipulated timeframe to provide a contract is usually 21 days.
The new contract should contain:
- Job title.
- Employment type (part-time or full-time employment).
- Employment duration.
- Employee's hours.
- Salary.
- Leave entitlements.
- Notice period.
7. Employee response
After offering a casual worker a contract for a permanent role, they must respond to your offer in writing within 21 days. You will minimise reasonable grounds for a dispute if you adhere to relevant requirements and document everything in writing.
Hiring temporary staff
Employing temporary staff such as casuals, seasonal workers, consultants, and contractors bolsters the diversity and efficiency of a workplace. Learn more about the benefits of hiring a contingent workforce with Hays NZ.
Hays NZ is an expert at recruitment outsourcing and hires casual staff across various industries, such as office support, retail, and sales. For more information, contact us today or find your nearest Hays office.