Recent legal action and sudden legislative changes have left both employers and employees confused about the rules that apply to the casual workforce.
In a bid to cut through this confusion, George Calderon, employment lawyer and seconded consultant at Employer Advisors, tells you all you need to know about recent developments and the current state of play when it comes to employing casuals.
“Currently we have a situation where thousands of casual workers are claiming they are owed millions of dollars in entitlements because they were incorrectly classified as a casual, while on the other hand we have employers complaining that these workers are double dipping because they have already been paid a special loading to compensate for their casual status,” Mr Calderon said.
“That’s why it’s important for employers and employees to understand exactly who qualifies as a casual worker, and who doesn’t, and what new rules apply.”
What is casual employment?
Casual employees are used by businesses to help supplement their workforce when they require work to be performed on an irregular and intermittent basis.
The Fair Work Act says that casual workers are not entitled to paid annual leave, sick leave, carer’s and compassionate leave, but to compensate them, they are paid a loading on their hourly rate.
Unfortunately, the Act does not give a clear definition of casual employment, but there are a few key attributes that apply, including:
- The ad-hoc, short term nature of casual employment
- The payment of a casual loading
- The absence of a firm commitment to future work
What is not casual employment?
Where an employment relationship is ‘regular’ or ‘systematic’ – the casual employment arrangement might not be truly casual.
“If an employee is working a regular pattern of shifts over an extended period of time, then chances are, they are not a casual employee,” Mr Calderon said.
For example, in a previous unfair dismissal case before the Fair Work Commission, a truck driver, who was employed as a casual to relieve other drivers was found to be employed on a regular and systematic basis, even though his hours varied from week to week.
The Fair Work Commission found that the weekly nature of the work, and the fact that it involved similar functions, and that it started at the same time, were all factors that pointed to a regular and systematic employment relationship.
A similar conclusion was reached in a second unfair dismissal case involving a telemarketer was found to be a regular and systematic casual employee.
In that case, the telemarketer worked various hours, ranging from between about 20 hours per week to 70 hours per week.
Despite the variation in hours and times of work, the Commission found that the employee had worked consistently during the period of her employment and was, therefore, a regular and systematic casual employee.
The landmark Workpac v Skene case
In a landmark ruling last year, the Full Court of the Federal Court of Australia found that a mine worker was incorrectly classified as a casual worker, because his roster showed that he performed a regular and continuous pattern of work.
Paul Skene worked as a truck driver at a Rio Tinto mine in central Queensland for two and a half years, but was employed by labour-hire company WorkPac as a casual.
Mr Skene’s job required him to fly in and fly out of the mine and work seven days on and then take seven days off.
He was given a roster 12 months in advance, and did not have flexibility in the hours or days that he worked or didn’t work.
He was paid a flat rate of $50 (eventually increased to $55) for his work.
When his employment was terminated, Mr Skene argued that he was not a casual employee but rather, a permanent employee who was therefore entitled to be paid accrued annual leave.
The Full Court confirmed the long-held view that true casual employment is irregular, uncertain, unpredictable and intermittent with a discontinuity in the pattern of work, including the absence of a firm advanced commitment to work.
The Full Court ruled that Mr Skene was a permanent employee and therefore entitled to payment of accrued but untaken annual leave upon termination of his employment.
“The Skene case really highlighted how more and more employers have been incorrectly classifying workers as casuals, to avoid paying full leave and entitlements,” Mr Calderon said.
“The whole ‘permanent-casual’ classification had been a bit of a rort, and the court finally put a stop to it.
“The decision put employers on notice, and many of them hit the panic button at the thought of having to pay hundreds of workers years and years of accrued leave entitlements.”
Opening of the floodgates
The Skene case opened the floodgates with thousands of casual workers lining up to claim their accrued annual leave entitlements.
Employers cried foul, arguing that those workers had already been paid a casual loading, and were therefore ‘double dipping’ by keeping the loading, and then claiming their annual leave entitlements on top.
Interestingly, in the Skene case, the employer was not able to claim an offset had already been paid because there was no clear evidence he was paid a casual loading at all — the rate was referred to as an hourly rate of $50 (later increased to $55) and did not specify a casual loading component.
Government steps in
Under pressure from frantic employer groups, the Workplace Relations Minister Kelly O’Dwyer stepped in late last year and made an amendment to the Fair Work Act, in a desperate bid to clarify the situation in relation to the ‘double dipping’ loophole.
Employers wanted to be able to offset any accrued leave entitlement payments with casual loadings that had already been paid.
The current position is now this: where an identifiable loading is paid in lieu of any entitlement under the National Employment Standards under the Fair Work Act 2009, an employer is entitled to seek to offset that loading if it turns out that the employee did have such an entitlement.
Mr Calderon said most people would accept the double dipping loophole should have been closed.
“You can’t have it both ways – you are either a casual and are paid a loading, or you are permanent and entitled to annual leave – you shouldn’t have both,” he said.
A late change to modern awards
Mr Calderon warned employers that most modern awards were amended in October last year to include a new clause that gives casual employees the right to request conversion to permanent employment.
“Many bosses and workers probably don’t know that a regular casual employee who has been working for one year is now entitled to ask to be changed to permanent full-time or part-time employment,” he said.
A “regular casual employee” is defined as a casual employee who, for the last 12 months, has worked a pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to perform as a permanent employee.
Some employers mistakenly believe that casual employees do not have the right to make claims either during or at the end of their employment.
The reality is that, just like full time and part time employees, casuals can also make unfair dismissal and adverse action claims.
But as with all employees, to make a claim for unfair dismissal, the casual worker must have:
- Completed the minimum employment period of six months (12 months for a small-business employer)
- Be covered by a modern award or enterprise agreement and earn less than the high-income threshold
Importantly for casuals, service as a casual employee will not count towards the minimum employment period unless the casual employee was:
- Employed on a regular and systematic basis
- Had a reasonable expectation of continuing employment with the employer on a regular and systematic basis
General protection provisions
When it comes to general protections provisions, all employees, including casual employees, are protected – and there are no threshold requirements to make a claim (such as period of service).
Generally, the general protections provisions provide that a “person” must not take adverse action against another “person”, including because of a workplace right, the person’s sex, age or race or other protected attribute or because the person is temporarily absent from work due to illness or injury.
A person can include an employee, prospective employee, an independent contractor and a prospective independent contractor.
Casual employees can also make underpayment and wage theft claims either privately or through the Fair Work Ombudsman.
Like all other employees, employers must ensure that casual employees are paid their minimum entitlements, including casual loading and overtime rates, and are paid for the minimum hours of work.
Casual employees are also not precluded from making other claims in relation to their employment, including bullying claims, workers compensation claims or discrimination claims.
Both federal and state anti-discrimination laws prohibit employers from discriminating against casual employees or prospective casual employees on the basis of a protected attribute.
What employers need to know
Mr Calderon says in light of recent developments, now is a good time for businesses to review any casual employment arrangements that they may have in place.
“The first thing employers should do is have a close look at their casual workers, and determine if they are, in fact, correctly classified as casuals,” he said.
“If they are working regular and systematic shifts, then it might be better to change them to part-time or full-time employees.”
Mr Calderon said that casual workers should be given employment contracts that clearly describe the ad hoc nature of their employment, and that a casual loading will be paid to compensate for paid leave entitlements.
“Employers should also review the recent changes to modern awards, including a new two hour minimum engagement for casuals which has just been included,” he said.
“It’s also a good idea to keep an eye on any changes to penalty rates and how they might affect the casual loading.”
Mr Calderon also warned employers to be ready to manage requests from their casual staff to change to part-time or full-time after 12 months of constant work.
“Employers actually have an obligation to let their casual workforce know that after the year is up, they are entitled to request to have their employment status changed,” he said.
George Calderon is one of our specialist team at Employer Advisors who can assist businesses with a range of workplace relations issues, including managing casual employees, and defending claims of unfair and unlawful dismissal, wage theft, and claims of sexual harassment and discrimination.
If you need assistance with a workplace issue, we can help.
Please call our specialist team at Employer Advisors today on
1300 853 837
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