Ever heard of the phrase ‘casual employees’? This term is gaining traction in the ever-evolving job market, but what exactly does it mean? Put, casual employees work without a fixed schedule or guarantee of regular hours. This flexibility can be a game changer, but it’s not all roses and rainbows. By reading this article, you’ll fully understand the ins and outs of casual employment – its benefits, drawbacks, and the rights surrounding it. Don’t miss out on this insightful piece, especially if you’re considering hopping onto the casual employment bandwagon. Knowledge is power, after all! Stay tuned, and let’s unravel the mystery together.
Causal Employees Meaning
A casual employment contract is an agreement between an employer and an employee in which the latter performs work that is not a central part of the employer’s business operations. This type of contract is used for employees who carry out tasks incidental to the company’s main line of business.
These casual employees, also called contractual employees, are not classified as regular, project, or seasonal employees according to the Labor Code. Their work is occasional and irregular, contrasting with regular employees’ consistent and predictable work.
The duration of casual employment should be at most twelve months. If the employment period extends beyond this limit, there is a risk that the employee could be reclassified as a regular employee.
The critical test for determining whether an employment relationship is casual revolves around two factors:
- The employee’s work must be incidental to the employer’s usual trade or business.
- The duration of the employment must be at most twelve months.
Factors To Consider as Casual Employees
Here are some essential factors that must be present for an employee to be classified as a casual:
Employment Agreement Type
Casual employees typically have a written agreement with their employer stating they are hired as casual workers. This agreement should outline the terms and conditions of their employment, including pay rates, working hours, and job responsibilities.
Working Hours
Casual workers do not have guaranteed work hours, unlike full-time or part-time employees. Their schedules can vary weekly, and they are usually called into work on an ‘as-needed’ basis.
Employment Tenure
Casual employment does not have a specified end date. It continues until either the employee or employer decides to end it.
Level of Employee Benefits
Casual employees generally receive different benefits than their full-time or part-time counterparts. They are not entitled to paid sick leave, annual leave, or public holidays. However, they often receive a higher pay rate — casual loading — to compensate for this lack of benefits.
Benefits For Causal Employees
According to the Philippine Labor Law, casual employees have unique benefits and entitlements that differentiate them from regular, project-based, and seasonal employees. Here’s a comprehensive guide to understanding these benefits:
Security of Tenure
While their work is incidental to the business and not usually necessary or primarily related to the employer’s trade, casual employees enjoy the security of tenure for the duration of their activity. They can only be terminated for just and authorized causes.
Monetary Benefits
Casual employees are entitled to essential monetary benefits. This includes receiving at least the minimum wage, the mandatory 13th-month pay, and overtime pay for work beyond eight hours a day.
Related: Understanding Fringe Benefit Tax: What You Need to Know
Transition to Regular Employment
If a casual employee has been working for the same employer continuously for over six months, they are entitled to transition from informal to regular employment. It will provide them additional benefits and entitlements such as sick leave, annual leave, and premium pay for holidays and rest days.
Disadvantages Of Being A Casual Employee
Despite the benefits of casual employment, there are also some drawbacks to consider. These include:
Unpredictable Hours
For many casual employees, their working hours can be irregular and unpredictable. They might not have steady work every week or month, so it can be hard to plan financially or develop a regular schedule.
Lack of Job Security
Since casual employment has a flexible duration, there is no guarantee that the job will last more than a few months. Employers also have the right to terminate employees anytime if they find them unsuitable for the role or deem them unnecessary.
Related: A Complete Guide on SSS Unemployment Benefit Program
However, it’s important to note that certain benefits like paid vacation and sick leave, superannuation, and worker’s compensation insurance typically apply to regular employees and may not apply to casual employees. The specific entitlements can vary depending on the terms of the employment contract and the nature of the work performed.
Insufficient Benefits
Casual employees do not usually receive additional benefits such as sick pay, holiday pay, or pension contributions like their full-time counterparts.
Related: De minimis Benefits and a 90,000 Tax Exemption Philippines
Casual Employees Subject to Tax
In the Philippines, casual employees are subject to taxes and have tax obligations like regular employees. Here’s a breakdown of what you need to know:
Income Tax
Casual employees are required to pay income tax on their earnings. The tax rate depends on the individual’s tax bracket, determined by their annual income. As of 2023, the Tax Reform for Acceleration and Inclusion (TRAIN) law has set tax rates ranging from 0% to 35%, with individuals earning PHP 250,000 or less per year exempted from income tax.
Withholding Tax on Wages
According to Republic Act 8424, employers are authorized to estimate and withhold the income taxes from the wages paid to their employees, including casual workers. Your employer deducts the estimated tax directly from your salary and delivers it to the Bureau of Internal Revenue (BIR) on your behalf.
Value-Added Tax (VAT)
If a casual employee is also engaged in a business selling goods or services, they may be subject to Value added tax if their gross annual sales exceed PHP 3 million.
FAQs About Casual Employees
1. How do I know if my employer has classified me as a casual employee?
Check your employment agreement and speak to your supervisor to determine whether you have been classified as an employee or contractor.
2. Do I need to pay taxes on my earnings as a casual worker?
Yes, you must pay income taxes as a casual employee. Your employer may also withhold the estimated income tax from your wages and deliver it to the BIR on your behalf.
3. Are casual employees entitled to the same benefits as regular employees?
Casual employees are generally entitled to a different level of benefits than full-time or part-time employees receive. However, they typically receive a higher pay rate — casual loading — to compensate for this lack of benefits.
4. Do casual employees have job security?
Yes, while their work is incidental and not necessary or primarily related to the employer’s trade, casual employees enjoy the security of tenure for the duration of their activity. They can only be terminated for just and authorized causes.
Conclusion
Casual employees play an essential role in the Philippine workforce. While they don’t receive the same benefits as regular employees, they enjoy job security and monetary benefits such as receiving at least the minimum wage and overtime pay for any work done beyond eight hours a day. Casual workers are also subject to taxes, including income tax and VAT. Understanding these obligations is essential to ensure casual workers are treated fairly and adequately compensated for their services.
The laws governing the rights of casual employees may vary from one jurisdiction to another, so employers and workers alike need to stay informed on the latest regulations in their area. By doing so, they can ensure that all parties involved can reap the benefits of casual employment.
It’s also worth noting that casual employees can transition into regular employees if they meet specific criteria after a year of work. It provides employees with an opportunity for job stability and long-term growth in their careers. For employers, it brings additional stability to their workforce and allows them to tap into valuable insights and experience from their casual workers.
In conclusion, becoming familiar with the rights and obligations of casual employees is essential for employers and employees alike. By understanding these regulations, both parties can ensure that casual workers are treated fairly and enjoy a positive working relationship with their employer.
Recommended: Contractual Employee vs. Permanent Employee
