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How casual is casual?

If this question has ever crossed your mind when it comes to employing people, you may need to review your workforce.

A recent landmark ruling by the full Federal Court of Australia has left employers and unions asking for a clearer definition on casual employment.

The court ruling found that a truck driver, who had been working under a casual agreement for nearly four years, was not a casual worker by law. This was said to have come down to his continuous and regular roster arrangement with his employer, the labour-hire company WorkPac.

The worker’s revised employment status meant that he was now entitled to back payments of around $21,000 in annual leave, plus $7,000 in interest. A nasty shock for his employer.

Constantly monitor your workforce

Employers take heed! If you have reliable casual workers who have become more regular since you first employed them, this recent ruling suggests they might no longer be classed as casual workers.

The Fair Work Act states that casual employment should be random and ad hoc. It would be wise to periodically review the working patterns of your casual workers to ensure you are legal.

But what about casual loading payments?

Casual workers receive a higher rate of pay known as casual loading because they do not receive employee benefits, such as holiday or sick pay. Employers may believe that they have already covered any back payments of annual leave through paying 25% casual loading. But the recent court ruling suggests that it is not that simple and this cannot be the sole defence.

Casual loading does not define an employment arrangement.

What does this mean for SMEs?

Many have criticised the ruling and reported that the decision could have a catastrophic effect on SMEs who employ casual workers. If this case is not overruled at the High Court it could open the door for casual workers to “double dip” on entitlements.

Get in touch with your local HR Dept for a review of your processes and employment/casual contracts to see if you could be at risk.