Do I need to create a new employment record or do I adjust the existing record for returning employee now on casual basis but was permanent before?

It's nice to see you here in the Community, @Quintin Velthuysen. 

You'll only need to adjust the existing record for your returning employee. Then, update his employment type from permanent to casual in the employee settings. I'm here to guide you through the steps. 

1. Go to Employees at the top menu. 
2. In the Employee Settings window, select National Insurance Record. 
3. Choose Casual in the Employment Type drop-down menu. 
4. In the Pay Run Settings section, select Pay Run Defaults. 
5. Change the Primary Pay Category. 
6. You'll also need to check your employee's leave allowance in the Leave Allowances page. 
7. Update any necessary information. 
8. Save the changes. 

For detailed steps, click the Updating Employee Details link through this article: Employee Management. 

Once done, you can create a pay run for your employee. 

I'm here anytime you have other concerns. Have a great day, @Quintin Velthuysen.