Casual employee or not? This is the question…

Friday May 29, 2020

Background: The recent federal court decision and media headlines such as “causal workers win leave entitlements’ have inevitably caused concerns among employers of casual workers.  A recent landmark ruling by the full Federal Court of Australia has left employers asking for a clearer definition of casual employment. The main question raised is about the importance of correctly classifying the employee as casual or permanent.

What was found? The ruling found that ‘casual’ employment status cannot be determined by the employment contract alone. This is regardless of payment of casual loading. The court also found that aspects such as regular and predictable work patterns, advance rostering and the provision of accommodation facilities, suggested the employee was in fact a permanent employee.

Although the employer had paid casual loading, the employee was not a casual worker and so was entitled to back payments of annual leave, personal leave, compassionate leave and public holiday pay.

What does this mean for employers?

The case impacts the manner in which casual employees are engaged and paid, though this does not automatically mean that all casual employees are eligible for paid leave.

Employers should assess the true nature of their casual employees based on the following criteria:

  1. Continuous Employment – How long has the arrangement been in place? Are there any ‘long term casuals’? Many modern awards require employers to notify casual employees that they can elect to convert to Full time or Part time employment after a set period of employment.
  2. Constant – How often is the employee required to work? Is the employment regular?
  3. Predictable – How systematic is the engagement? Is there any predictability in rostering the employee?  Do the hours of work appear to be guaranteed or planned in advance?

This assessment should look into the substance of the arrangement and not how it is described in the contract.

The Fair Work Ombudsman has indicated they will review the decision to determine if any changes to the characteristics of casual employment have changed as a result. This is likely to focus on long term casual arrangements and indicates increased attention on perceived ‘sham’ casual arrangements.

Review of existing contracts:

We also recommend familiarising yourself once again with the employment award and checking existing employment contracts to ensure:

  • The contract specifies that the employer can choose whether to offer employment on a particular day, time or shift and the employee is able to decline this.
  • The contract describes the employment relationship as causal and contains clauses relating to payment of a casual loading. Note that this loading may not be set-off against leave entitlements if the employment is in fact ‘other than casual’.
  • Work patterns are unpredictable in that work is ‘on demand’ rather than set up front or pre-determined;
  • There is no firm advance commitment of continuing and indefinite work.
  • Important award conditions are being met.

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